First published 13 Nov 2026, 6:11am
Vic govt, Albo, called on to fill hole left by Landlord exodus.
The Victorian and federal governments have been accused of making the state’s rental crisis worse without turning a landlord exodus into a promised first-home buyer boon.
It comes as Australian Bureau of Statistics loan data released this week shows the state’s latest investor lending numbers have plunged by more than 2500 loans from last year and are now at the lowest level since the Covid-pandemic in 2020.
It compounds real estate agent warnings that landlords are still selling off homes faster than they are buying them, after separate data showed that the state had lost more than 16,000 rental homes to a landlord exodus in the three years to June.
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The Real Estate Institute of Victoria is now cautioning the next state government needs to urgently bring investors back to boost the flagging numbers of homes available to tenants.
And the Housing Industry Association has advised that with new home building expected to fall in 2027, governments should bring forward public and social housing plans.
The REIV has warned the reductions in loans to investors as well as the 16,400-home loss to rental supply has coincided with state and federal government policies targeting investors.
In May 2023 the Victorian government, then led by Daniel Andrews, announced plans to increase land tax for secondary properties across the state — including rental homes.
REIV analysis shows that a median-priced property has gone from paying $1597.50 in land tax to $3474.
There have also been added costs caused by extensive regulatory rental reforms that have reset minimum standards, often requiring significant spending by landlords to meet.
Median rents across Victoria by property type and how much they have changed in the past few months and year, from the latest Victorian Rental Report.
In May this year the Albanese government announced significant changes to negative gearing and capital gains tax discounts for investors, which along with rising interest rates has triggered significant pull back from investors across the country.
The latest ABS data shows just 6819 loans being issued to property investors in the September quarter.
A year ago it was 11,150, marking a 4331 reduction from 12 months prior.
Meanwhile Victorian first-home buyer loans are also in dropping, falling from 9983 in the September quarter a year ago to just 8337 in the latest ABS data, suggesting their numbers are not increasing in response to government efforts to reduce competition.
The lending figures also coincide with an interest-rate hiking cycle from the Reserve Bank, however the last time the nation went through such a phase with a dozen rate hikes from May, 2022, to June, 2023, the number of investors taking out loans in Victoria bottomed out at 6890.
REIV chief executive Toby Balazs has called for Victoria’s next government needs to urgently support an increase in rental homes across the state.
This was despite the cost of borrowing rising by 3.75 percentage points in the 14 month timeline, compared to a 1.25 percentage point increase so far this year.
Meanwhile, figures released by Homes Victoria last month showed the number of rental homes across the state has fallen from 681,141 in the June quarter of 2023 to 664,663 at the same point this year.
REIV chief executive Toby Balazs said the landlord exodus must be stopped.
“We need people to be buying and holding rental properties and putting them into the rental pool, and what’s frustrating and concerning is that the opposite continues to be delivered,” Mr Balazs said.
“Interest rate rises will have of course made an impact on investment lending and investor activity, however the federal budget has undeniably made a significant impact on the property investors’ willingness to continue purchasing.”
He added that regulatory and tax changes being driven by both state and federal leaders had left both levels of government in a position where they had made the rental crisis worse and would have to help remedy the situation by boosting the supply.
This Mill Park house was sold by its landlord owner in May this year, with the landlord owner noting government pressure had become too much — a few days later the federal government changed investor tax settings including negative gearing.
HIA chief economist Tim Reardon believes an upcoming shortfall in new home building should be absorbed by state and federal governments building public housing.
“They have created an environment whereby a rental problem has become a rental crisis and they need to do two things: they should be adding in to it to the supply themselves, whilst removing the disincentives for private landlords to continue being active in this state,” Mr Balasz said.
HIA chief economist Tim Reardon said with private housing construction expected to slow in 2027, governments should be looking to bring forward social and public housing projects to take advantage of the reduced demand for trades.
“Public housing investment is not a substitute for restoring private investment. Australia now needs around 260,000 new homes each year to meet the National Housing Accord target, and the overwhelming majority will continue to depend on private finance,” Mr Reardon said.
“But a recovery in investment in new home building depends on inflation moderating, interest rates stabilising and confidence returning before the existing pipeline of work is exhausted.
“If those conditions do not materialise, Australia risks entering 2028 with fewer homes under construction, a deeper housing shortage and even greater pressure on affordability.”
A deepening house crisis by 2028 could leave Victorians facing tougher rental conditions.
Jellis Craig chief executive Andrew McCann heads one of the state’s biggest real estate firms and has revealed their landlords have been selling off at an accelerated rate for three years.
Jellis Craig chief executive Andrew McCann, whose real estate firm handles about 35,000 rentals across the state, said elevated levels of landlords selling off had now continued for three years.
Mr McCann added that rising costs from rates and inflation were factors, but that “government interventions have only added fuel to the already lit fire”.
“In the past three years we have sold double the number off our rent roll than we have historically, and that’s a proper net outflow,” he said.
“That in itself is a real concern as what it’s doing is creating a whole lot of competitive tension to what is left in the rental pool in an under-supplied rental market.”
He added that the shift to sell to first-home buyers was failing both because they were having their borrowing capacity impacted by the Reserve Bank’s hikes, but also because their rents were rising making it harder to save a deposit.
“And sadly we have lost all of the motivation to buy into the market for investors,” Mr McCann said,
“They have been punished with exorbitant taxation and regulation and that’s why they are leaving.”
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