Investors poised to sell amid potential CGT reforms, warns PIPA
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PIPA Chair Cate Bakos
The Property Investment Professionals of Australia (PIPA) has sounded an alarm over proposed changes to Capital Gains Tax (CGT), cautioning that such reforms could spark a mass exodus of property investors and exacerbate Australia’s already critical rental crisis.
According to the 2025 PIPA Investor Sentiment Survey, a significant 35 per cent of investors indicated they would cease property investment if CGT were reduced to 25 per cent after 12 months of ownership. This potential shift in investment strategy comes at a time when the rental market is already under severe pressure.
PIPA Chair Cate Bakos highlighted the urgency of the situation, stating, “These numbers are not hypothetical because investors are already leaving.” This sentiment is supported by survey findings showing that 16.7 per cent of investors sold at least one property in the year leading up to August, a noticeable increase from previous years—14.1 per cent in the prior year and 12.1 per cent in 2023.
The survey also revealed that 19 per cent of investors who sold properties in the past year did so due to concerns over possible Federal Government tax reforms. Furthermore, 51 per cent of current investors cited the same apprehensions as a primary reason they might sell in the next 12 to 24 months. Ms Bakos described this as “an extraordinary red flag for policymakers.”
This warning comes as SQM Research’s latest data underscores the precarious state of the national rental market, with a vacancy rate of just 1.4 per cent. Several capital cities are experiencing even more severe shortages: Perth at 0.7 per cent, Adelaide at 0.9 per cent, and Hobart at a mere 0.4 per cent. Even major cities like Sydney and Melbourne are not immune, with vacancy rates of 1.8 per cent and 2 per cent, respectively, both well below their long-term averages.
Ms Bakos emphasised the potential consequences of investor withdrawal from the market, stating, “When vacancy rates are this tight, removing investors from the market is economically reckless.” She further explained, “Every investor who sells to an owner-occupier removes a rental home from the system and tenants are the ones who suffer the consequences.”
The pressure on the rental market is further evidenced by rising advertised rents. SQM’s data shows a 2.4 per cent increase in national rents in the first 30 days of January alone, and a 5.8 per cent rise year-on-year, highlighting the financial strain on households.
“Investors provide more than 90 per cent of Australia’s rental homes,” Ms Bakos pointed out. “If governments want a functioning rental market, they must stop treating investors as expendable because the rental system collapses without them.”
PIPA is advocating for a more thoughtful approach to policy-making, urging the government to engage in evidence-based policy design and meaningful consultation with industry stakeholders. The organisation warns that without careful consideration, the proposed CGT reforms could inadvertently worsen the rental affordability crisis, leaving tenants to bear the brunt of reduced rental supply.
As the debate over CGT reforms continues, the insights from PIPA’s survey and the stark data from SQM Research underscore the delicate balance required to maintain a stable and affordable rental market in Australia. The potential for significant investor withdrawal raises questions about the future of housing affordability and availability, making it a pressing issue for policymakers to address.