Recent tax and superannuation changes targeting property investors could have significant implications for the rental market. With demand continuing to outstrip new housing supply, some analysts warn the measures may place further pressure on available rentals.
The rental market is already under strain, with vacancy rates sitting at just 1.3% nationally in June 2026, based on SQM Research data. Meanwhile, median rents have climbed to $705 a week, up 5.9% in the past year and 40.6% over five years, according to Cotality.
Speaking on the Savings Tip Jar Podcast, property expert and Aus Property Professionals CEO Lloyd Edge said the policy focus on investors risks overlooking a more fundamental issue, which is the lack of housing supply.
Supply crunch remains the core problem
While data from the Australian Bureau of Statistics shows net migration has fallen to 301,000, new housing completions remain well below demand, with fewer than 200,000 dwellings delivered each year.
Mr Edge argued that this supply-demand gap, rather than investor activity, is the key driver of both prices and rents.
“They’re not really looking at the bigger picture… The bigger picture is the lack of supply of property around the country,” he said.
More broadly, housing analysts and economists argue the real challenge lies in the supply pipeline, where planning constraints, construction costs and drawn-out approvals are slowing the delivery of new homes and supporting higher rents.
Investor pullback could push rents higher
The government has argued the reforms, including a ban on SMSFs borrowing to purchase residential property from August, will help level the playing field for first-home buyers.
Read more: SMSF home lending scuttled under new rules
However, there are growing concerns that reduced investor participation could further tighten rental supply, particularly given most rental housing in Australia is provided by private landlords.
Mr Edge said fewer investors entering the market would likely flow through to renters.
“One of the biggest things that I think we are going to see is an increase in rents,” he said.
Mr Edge pointed to historical evidence that efforts to curb investor demand had previously been followed by tighter rental conditions.
“Back in 1985… they abolished negative gearing, and then we saw rents increase… and they had to bring it back in 1987,” he said.
Policy changes distort short-term demand
In the near term, policy changes are also influencing buyer behaviour. Mr Edge said upcoming SMSF rule changes have prompted a short-term lift in investor activity, particularly ahead of key deadlines.
“There has been the changes to the SMSF, so a lot of people are out there buying… before the 10th of August,” he said.
Read more: SMSFs in race to finalise residential property purchases
At the same time, broader market conditions are softening. Auction clearance rates have declined in major cities and prices are easing in some areas.
Mr Edge said downturns are a normal part of the property cycle and can present opportunities for investors willing to enter the market during weaker conditions.
“We are certainly coming to a buyer’s market… that’s also a good opportunity,” he said.
The longer-term implications for the rental market remain uncertain, with housing supply, population growth and investor participation likely to shape future outcomes.
