I recently read a concerning story about the exodus of investors from some east coast rental markets.

It referred to data from FoundIt which said investors listed 1663 rental properties for sale in Victoria in May, while they purchased 1021 properties that month.

That’s a net loss of 642 homes from a market which has been losing rental properties for some time. In Queensland, it was estimated 993 investors left the market, while only 661 investment properties were purchased. That’s a net loss of 332 properties.

While the story didn’t mention Western Australia, REIWA members reported an increase in investor sales before the 2026-27 Federal Budget, and have seen a decline in investor purchasing activity since.

Many people would say this is fantastic news. An investor selling their property gives someone else a chance at homeownership while fewer investors in the market reduces competition for homes for sale.

But we shouldn’t be celebrating, as a reduction in supply is not good news. There will always be people who need or want to rent and fewer rental properties will not benefit them.

When people express concern about rental properties being sold, a common response is ‘the property hasn’t vanished from the market’. That’s true. It doesn’t disappear as such, but it may have vanished from the rental market.

Where does this leave the tenant who was living in that home? If we are being realistic, it is unlikely the tenant was the purchaser. Unfortunately, many tenants are not in a position to buy when the property they are renting is sold.

They may not have a deposit saved. They may not be able to service a mortgage. And if they can, they may not want to buy at that point in their lives.

The new taxation policy may drive investors towards new builds, helping replace some of the lost rental supply.

However, investors aren’t just motivated by tax benefits – they want a good return. If we look at Perth, many of these new builds will be on the outskirts of the metropolitan area.

These are not necessarily suburbs where tenants prefer to live, which makes it harder to fill vacancies and generate a consistent income. Should investors decide the numbers stack up, it will take 12-18 months before these new builds are finished and added to rental supply.

Right now, we are worried about housing availability and affordability for tenants. We hope the changes to taxation policy, along with the upcoming reforms to the Residential Tenancies Act 1987, do not deter investment and recreate the extreme rental market conditions WA experienced just a couple of years ago. Only time will tell.