Investor sales in Melbourne are surging — even as the state remains labeled “hostile to investment.” According to the latest Property Investment Professionals of Australia (PIPA) survey, 22.1% of investors sold at least one property in Melbourne over the past year — up from 18.4% in 2024. That’s the highest rate of any capital city in Australia.
Brisbane followed closely at 19.7%, while Perth cracked the top three for the first time at 11%. Meanwhile, Sydney saw a sharp drop — falling to just 6.3%, down from 10.2% last year. The shift reflects changing investor priorities: capital growth potential now outweighs policy comfort.
Despite Victoria’s reputation for “punitive or overly restrictive” policies — including rising land tax, vacancy levies, and sweeping tenancy reforms — investors are circling back. Why? Because Melbourne’s long-stagnant prices appear poised for a rebound. In fact, 41% of investors now see Melbourne as the best place to buy — a dramatic jump from 26.3% last year.
PIPA chair Lachlan Vidler doesn’t find the contradiction surprising. “The combination of rising costs and regulatory uncertainty is pushing some investors out,” he said. “But others see opportunity — especially where prices have lagged and population growth remains strong.”
Good long-term capital growth prospects drove 70.3% of investor optimism. Close behind were population growth (58.5%) and Melbourne’s status as a major capital city (52.1%). Simply put, investors believe the fundamentals still favor Melbourne — even if the policy climate doesn’t.
Yet this optimism is shadowed by a broader trend: seasoned investors are exiting the market at the highest rate in four years. The PIPA survey — now in its eleventh year — found that 36% of respondents believe now is a good time to sell, up from 29% in 2024. Moreover, 16.7% sold at least one property in the year to August — up from 14.1% in 2024 and 12.1% in 2023.
Most sellers weren’t newcomers. Over half had held their properties for five years or more. Their reasons? Mounting debt, rising compliance costs, higher property management fees, and new minimum standards for rentals. Many also cited the looming threat of federal reforms — especially to negative gearing and capital gains tax — as a final push toward the exit.
Alarmingly, only 42% of sold properties were bought by other investors. The rest went to owner-occupiers (37%) and first-home buyers (25%). That means fewer homes are returning to the rental pool — a trend Vidler calls “structural, not temporary.”
“Once a property leaves the rental market, it rarely comes back,” he warned. “We’re watching the slow dismantling of Australia’s rental supply. Tenants are paying the price through rising rents and vanishing options.”
The investor exodus isn’t just about economics — it’s also about perception. Nearly half of respondents said negative media portrayals — labeling investors as “greedy” or “market destroyers” — have damaged morale. Worse, 64% were unaware of Victoria’s new vacant residential land tax. Around 60% admitted they had only moderate or limited knowledge of recent tenancy law changes nationwide.
Vidler stressed that uncertainty — not just policy — is the real killer. “The mere suggestion of changes to negative gearing or CGT is enough to destabilize sentiment. These aren’t fringe fears — they’re mainstream concerns held by everyday Australians who provide rental housing.”
He’s calling for clearer communication, genuine consultation, and an end to knee-jerk reforms. “Investors aren’t the enemy. They’re part of the solution — if you let them be.”
Cate Bakos, PIPA Victorian board director and buyer’s advocate, echoed that sentiment. “None of this is a shock. We’ve eroded our rental pool, and now the government wants to step in — but they can’t build fast enough to meet demand.”
She added: “For decades, the state outsourced rental housing to the private market. Now that investors are pulling back, the government must consult them — not vilify them — to absorb market shocks and preserve supply.”
In short, investor sales in Melbourne tell two stories. One is of opportunity — a city ripe for price growth. The other is of fragility — a rental market under siege from policy, perception, and attrition. How Victoria responds will shape not just its housing future — but the lives of every renter waiting for a home.
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