Property investors are exiting the market at the highest rate on record, with new data suggesting the federal government's negative gearing and capital gains tax (CGT) reforms are now reshaping investment decisions in real time — not just influencing sentiment on paper.
The Property Investment Professionals of Australia's (PIPA) 2026 Annual Investor Sentiment Survey found 18.3% of respondents had sold at least one property in the year to August, up from 16.7% last year and marking a third consecutive annual rise. More than half of those sales (51.6%) went to owner-occupiers, and a further 12.4% to first-home buyers — meaning the majority of these properties have now left the rental pool entirely.
The selling is happening despite investors having little enthusiasm for the market: just 7.6% believe now is a good time to sell, down from 36% in 2025, while only 44.1% see the next year as a good time to buy residential property, down from close to 60%.
"Investors are not selling because they think it is a smart time to sell. Many are selling because the numbers no longer work for them," PIPA chair Cate Bakos (pictured) said, pointing to rising interest rates, land tax, and compliance costs as key pressures on holding capacity.
That shift was already flagged months before the changes were legislated: an earlier survey found 61% of investors said they would scale back or sell if the proposed CGT and negative gearing reforms proceeded.
Notably, those selling are largely established investors rather than short-term speculators. The most common holding period among sellers was 10 to 20 years (37.1%, up from 30.7% last year), with rising holding and compliance costs — including insurance and property management fees — now the top reason for selling, cited by 37.1% of respondents.
The reforms have already passed into law, though the tax treatment itself only takes effect from 1 July 2027, with properties purchased before 12 May 2026 retaining negative gearing entitlements under grandfathering provisions.
Even with the practical effects still to phase in, buying appetite has already cooled sharply since the changes were legislated. Just 14.7% of investors say their intention to buy additional properties is unaffected, while 21.5% say they're unlikely to buy again unless the changes are repealed. Only 27.8% now plan to purchase another investment property, down from 41% last year.
Cash flow pressure is compounding the exit trend, with 62.3% of investors now in negative cash flow — up from 56% a year earlier — and 87.2% saying they lack confidence that future governments will maintain stable, predictable tax settings for property investors.
"Once trust in the stability of the tax system is gone, it is extraordinarily hard for the government in power to win that trust back," Bakos said.
Despite the volatility, professional advice remains highly valued: 96.1% of investors believe property investment advisers should hold formal training or education, while mortgage brokers remained the second most-used professional resource among investors surveyed.
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