Record investor sell-off as CGT reforms reshape the market
One in five investment property owners sold up in the past year as negative gearing and CGT changes transform the market landscape.
The federal government's negative gearing and capital gains tax (CGT) overhaul has crossed from policy debate into lived reality. New survey data released this week shows a record share of property investors sold at least one holding over the past 12 months — not because they thought it was the right time, but because the numbers had stopped working.
For existing investors weighing whether to hold, refinance or exit — and for prospective buyers watching the market — this data matters. Here's what the numbers actually show, and what it means for your position.
A record share of investors are selling — but not because they want to
The Property Investment Professionals of Australia's (PIPA) 2026 Annual Investor Sentiment Survey, reported by MPA Australia, found 18.3% of respondents had sold at least one property in the year to August 2026. That's up from 16.7% last year, and marks a third consecutive annual rise.
Put that in context: just 7.6% of investors believe now is actually a good time to sell, down sharply from 36% in 2025. The selling is happening in spite of — not because of — market confidence. PIPA chair Cate Bakos summed it up plainly: "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."
The top pressure points are rising interest rates, land tax, and compliance costs. Add insurance and property management fees, and 62.3% of investors are now in negative cash flow — up from 56% a year earlier. When holding costs outpace rental income and the tax treatment is set to tighten, the exit calculation changes.
Notably, it is not short-term speculators heading for the door. The most common holding period among sellers is 10 to 20 years (37.1%, up from 30.7% last year). These are long-term landlords who built portfolios under a different set of rules.
Where the properties are going — and what it means for supply
The composition of sales has direct implications for the broader housing market. More than half of the properties sold (51.6%) went to owner-occupiers, and a further 12.4% to first-home buyers — meaning the majority of these investment properties have now left the rental pool entirely.
For renters, that is a shrinking supply of rental stock. For first-home buyers, it could represent a genuine window: some of these properties are coming to market at prices shaped by investor exits rather than peak demand. If you are a first-home buyer thinking about your options, now is a good time to model what you could actually borrow. Our borrowing power calculator is a useful starting point.
Buying appetite among existing investors has cooled sharply. Only 27.8% now plan to purchase another investment property — down from 41% last year. Just 14.7% say their intention to buy is completely unaffected by the changes, while 21.5% say they are unlikely to buy again unless the reforms are repealed. Only 44.1% see the next year as a good time to buy residential property at all, down from close to 60%.
What the tax changes actually mean — and the timing
It is worth being precise about what has changed and when it applies. The negative gearing and CGT reforms have already passed into law. However, the new tax treatment itself only applies from 1 July 2027. Properties purchased before 12 May 2026 retain their negative gearing entitlements under grandfathering provisions.
That means investors who already hold pre-12 May 2026 properties are not immediately affected — but many are making decisions now based on where they think the market is heading, and whether the compliance cost of holding is worth it. A telling data point: 87.2% of investors say 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.
An earlier survey found 61% of investors said they would scale back or sell if the proposed CGT and negative gearing reforms proceeded. That prediction is now playing out.
What investors should do right now
If you are an investor weighing whether to hold, sell or restructure, the right answer depends heavily on your individual cash flow position, your loan structure, and whether your properties fall under grandfathering provisions. Two investors with similar portfolios could reasonably reach different conclusions.
A few practical steps are worth taking regardless of which direction you are leaning:
**Review your loan structure.** With 62.3% of investors in negative cash flow and interest rates still elevated, the gap between what you are earning and what you are paying is worth auditing properly. Our refinance savings calculator can show whether switching to a more competitive rate could meaningfully improve your position.
**Understand your grandfathering position.** Properties purchased before 12 May 2026 retain negative gearing treatment. If you bought before that date, the calculus is different from someone who purchased after.
**Get professional input before making a major decision.** Despite the volatility, professional advice is highly valued: 96.1% of investors believe investment advisers should hold formal training or education, and mortgage brokers remained the second most-used professional resource among investors surveyed. If you want to benchmark your current loan against what is available in the market, exploring investor home loans is a good starting point.
For both investors and first-home buyers, the current period of adjustment creates real opportunities. But navigating them well requires understanding exactly what the rules say — not just what the sentiment is.