Speculation about changes to negative gearing has triggered a sharp decline in investor activity across southeast Queensland, potentially deepening an already critical rental shortage.
Internal data from Image Property, which has offices across Brisbane, the Sunshine Coast, Gold Coast, and the Moreton Bay region, has revealed a “clear and measurable retreat” in investor participation across the region.
The franchise looked at more than 5000 offers received between July 1, 2025 and April 30 this year, and found a sharp drop in investor offers, which may be good news for homebuyers but not so for renters who rely on investment properties to put a roof over their heads.
The analysis revealed that between July and December 2025, investors made up 28 per cent of all offers on Image Property listings.
In November last year, the Australian Property Investor reported that investor loans had jumped to near-record levels in the September quarter due to cheaper borrowing costs, limited housing supply and rising rents nationwide.
The latest Australian Bureau of Statistics (ABS) Lending Indicators revealed that the number of new investor loan commitments for dwellings also rose 5.5 per cent in the December quarter.
Since then, the Reserve Bank of Australia has lifted the official cash rate from 3.6 per cent three times – February (3.85%), March (4.1%) and on Tuesday (4.35%) as a result of inflation woes.
And the effects on investor behaviour has been obvious, according to the Image Property analysis, which noted that the number of investor offers had fallen to 22 per cent since January 1, representing a 21 per cent decline in investor participation at a time when rental supply is already critically constrained.
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Image Property managing director Joel Davis said the downturn “aligns directly” with intensifying speculation about federal government changes to negative gearing and the Capital Gains Tax (CGT) discount in the upcoming Budget.
The cost of servicing an investor loan has also lost its shine.
“The moment the government began signalling possible cuts to negative gearing or the CGT discount, investor confidence took a hit across southeast Queensland,” Mr Davis said.
“We’re seeing investors pause, hesitate or withdraw entirely and that hesitation is already flowing through to reduced rental supply.
“This is not sentiment or theory – it’s real-time behavioural change across thousands of transactions.”
Image Property managing director Joel Davis
The decline comes as vacancy rates across the region remain at historic lows.
Current figures show Greater Brisbane at around 0.9 per cent, the Gold Coast at one per cent, and the Sunshine Coast at one per cent — all far below the healthy 2.6 to 3.5 per cent vacancy rate range.
This 3-bedroom duplex in Oxenford is pitched to both homeowners and investors and is listed for offers over $889,000
Mr Davis said the current conditions have already pushed rents higher and made it increasingly difficult for young people to secure a rental property, let alone save for a first home.
“Reduced investor activity will only deepen the crisis if the mooted tax reforms become a reality next week,” he said.
“If investors continue to step back, vacancy rates will tighten even further and rents will rise. “Young people will be squeezed hardest and not just in the rental market, but in their ability to save for a first home.
“The government has consistently struggled to deliver new rental supply, so if investors desert the market, where exactly is the new stock going to come from?”
He said the federal government should be looking to incentivise new supply, not deter it. “Maintaining the CGT discount and preserving negative gearing – at least for investors who buy or build new stock – would directly support the creation of additional rental homes,” he said.
“If the goal is more supply, policy should reward the people actually providing it.”
On the market for offers over $1.2 million, this Tewantin house is being marketed as a “prime investment opportunity” with a lease in place until May next year
The analysis comes as speculation reaches fever pitch that Treasurer Jim Chalmers will make cuts to the capital gains tax discount or negative gearing concessions in next week’s federal budget, a move some argue is a “pure tax grab” that could hit far more Australians than first reported, including the younger generations it was meant to help.
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Treasurer Jim Chalmers. Picture: NewsWire / Martin Ollman.
Recent Qaive and Tulipwood Economics modelling commissioned by the Real Estate Institute of Australia, Property Council, HIA and Master Builders showed new home building would slow, and rents would rise under a range of scenarios.
If negative gearing concessions were removed for all new and current rental properties except for one current property per investor, the modelling showed it would slash home building starts by 45,500 over the five-year period 2025-26 to 2029-30.
It would drive up rents above that in the business-as-usual (BAU) scenario by more than 2 per cent per year in real terms by 2029-30.
Under a different scenario, there would be almost 46,000 fewer new home starts over the period if the CGT discount was halved to 25 per cent and negative gearing was restricted to a single existing property.
Real Estate Institute of Australia president Jacob Caine told realestate.com.au that the government should focus on housing delivery first.
“Modelling undertaken by every think tank, every economist, and the government shows that adjusting downwards or removing the current CGT settings hurts housing delivery,” he said.
“Australia is in a structural housing deficit and cannot afford to make policy decisions that mean fewer homes get built for Australians.
“The government needs to first address the regulatory barriers to delivering housing at the scale we need, before contemplating changes to tax settings that ultimately harm the very people they’re trying to support – first-home buyers and renters.”
Tent cities have popped up across southeast Queensland as some renters are forced out. Picture: John Gass
HIA managing director Jocelyn Martin said property investors built two out of five new homes in Australia.
“We can ill afford to see those investors leave the market for more attractive options,” Ms Martin said.
“If we do not build enough homes, rent prices will continue to increase.”
The median weekly rent for homes across Australia’s capital cities climbed to $680 during the March 2026 quarter, up 4.6 per cent compared to the same time last year, according to PropTrack.
Across regional areas, it jumped 9.1 per cent to $600 during the same time.
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