Victoria shed 20,000 properties from the state’s rental stock over 18 months as higher interest rates, extra costs due to new minimum rental standards and higher taxes on property investors hit at the same time as a cost-of-living crisis.
Headline figures in other states – measured by rental bond data – do not show the same dramatic drop as Victoria, but property sales are taking place across the country, reshaping both ownership and the real estate sector.
National agency group Ray White said in the current market 65 per cent of its sellers at auction were owner-occupiers and 32 per cent were investors. As many as 77 per cent of its buyers are owner-occupiers, however, and just 22 per cent are investors.
The apparent decline in rental stock triggers warnings from investor groups and the real estate industry that fewer rental homes on the market could push rents higher.
“This decline is a strong indicator of investor withdrawal from the rental market,” Real Estate Institute of Victoria chief executive Kelly Ryan said.

“It further implies a contraction in available rental properties, driving up prices while limiting renters’ choices.”
That will happen, but only if selling continues for a long period. In the short term, a rental property will either be bought by another investor who rents it out or by an owner-occupier who no longer needs to rent, said AMP chief economist Shane Oliver.
“In the short term, investors selling is unlikely to have much impact,” Dr Oliver said.
“Another investor or an owner-occupier will buy the property. Longer term, if investors continue to sell on a net basis, then it could drive up rents as there will be less rental properties available.”
Picking up
But after a dip that troughed in mid-2023, a year after the Reserve Bank of Australia started raising rates, investor appetite is picking up.
The latest official home loan data shows the value of new loan commitments to property investors picked up to $125 billion in the year to September, the seventh straight month of year-on-year growth and a 26 per cent increase on a year earlier.
“The housing credit data shows relative strength in investor credit growth,” Dr Oliver said. “It’s been rising at a solid pace, suggesting more investors had been coming into the market than exiting.”
Of course, the headline national figures hide variations between states, which are subject to their own market dynamics.
Those separate dynamics are clear from rental bond data, which show the decline in rental stock has been starkest in Victoria. The number of rental bonds in the state dropped almost 4 per cent from 676,791 in March 2023 to 652,766 in September 2024.
Over the same period, the number of rental bonds ticked up slightly in Queensland from 620,674 to 624,504. In NSW, the largest state, over the year for which data was available, the number of rental bonds also gained marginally, from 966,172 in September 2023 to 969,006 in September 2024.

In Victoria, the loss of rental stock is creating a challenge for smaller agencies that rely on property management revenue – colloquially known as rent roll – to provide a stable income source when sale commissions dry up, as they do in depressed markets.
“Some rent rolls in Victoria, we’ve been monitoring, have experienced a huge reduction in properties, and they haven’t been replaced because investors weren’t in the market to buy those properties again,” said Charlotte Pascoe, the chief executive of real estate group Stockdale & Leggo, which has 32 offices in Victoria and Queensland.
“The amount of investment properties within real estate businesses has reduced, as a general rule of thumb, at an attrition rate of about 15 per cent.”
Consolidation
The shake-up is hitting smaller real estate agencies harder as the more complex business of being a landlord prompts remaining owners to find agencies that can help them navigate the environment.
There’s also consolidation.
Ray White chief economist Nerida Conisbee said the number of properties under management at her company – the country’s biggest real estate agency – had increased 8 per cent year-on-year to 61,333 in Victoria, despite the net reduction of rental properties in the state.
“A lot of small independents are selling out,” she said.
Even if the number of rental properties isn’t shrinking, markets are suffering from insufficient growth. Real Estate Institute of NSW chief executive Tim McKibbin said the increase in rental properties, which averaged out at 294 per month, lagged the state’s increase in population.
“The number of rental properties is not keeping pace with our population growth,” Mr McKibbin said.
“I’ve been at the REINSW for 20 years and from my experience over that time the normal yearly increase in properties was circa 5 per cent.”
In Queensland, investors were selling to owner-occupiers, often first-home buyers, in the Gold Coast. But in areas such as South Brisbane and Logan, investors were more likely to sell to other investors, Ms Conisbee said.
“That could be people cashing in, struggling with higher interest rates,” she said.
Source: Financial Review – afr.com