Investors are selling at record rates after negative gearing reform: what it means for first home buyers

A new national survey of property investors, released in mid September 2026, shows landlords selling up in the highest numbers the survey has recorded, with many of those homes going straight to owner-occupiers and first home buyers. The results land about four months after the federal budget removed negative gearing for established homes bought after 12 May 2026, and they offer one of the first real reads on how investors are responding to the new tax settings.

What the survey found

The Property Investment Professionals of Australia's Annual Investor Sentiment Survey found that 18.3% of investors sold at least one property in the year to August, up from 16.7% the year before. That is the third year in a row the share of sellers has climbed. Of those sales, roughly 51.6% went to owner-occupiers and a further 12.4% went to first home buyers, meaning well over half of these homes have left the rental pool for good.

The survey's organisers pointed to rising interest rates, land tax and compliance costs as the reasons investors gave for selling, rather than the tax changes alone. Many said they were not selling because it looked like a smart time to sell. Instead, the numbers on holding the property had stopped working for them.

Why the tax changes are adding pressure

• Negative gearing removed for established homes. Established dwellings bought after 12 May 2026 lose access to negative gearing from 1 July 2027, while properties investors already held at that date are grandfathered under the old rules.
• New builds are treated differently. The reform leaves negative gearing in place for new-build purchases, which means investor demand may stay comparatively stronger in that segment even as it eases for existing homes.
• Loan sizes tell part of the story. Industry lending data from earlier in 2026 put the average investor loan at around 22% higher than the average owner-occupier first home buyer loan, a gap of approximately $130,000. A smaller pool of investors bidding at that level could ease some of the competition first home buyers face on established homes.

What this means for first home buyers

Government modelling behind the reform suggested it could add roughly 75,000 additional owner-occupiers over the next decade by freeing up established homes that would otherwise have been bought and held by investors. A single survey is not proof that this is already playing out everywhere, and conditions still vary a lot between suburbs and property types, but the early direction lines up with what the policy was designed to do.

• Established homes may be facing less investor competition than in previous years, which is worth factoring in if you have been priced out of auctions in the past.
• New-build and off-the-plan properties keep their negative gearing treatment, so investor interest, and competition, could stay firmer in that part of the market.
• A softer investor segment does not automatically mean lower prices in your suburb. Local supply, population growth and interest rates still matter more than any single policy change.
• It is worth talking to your lender or a mortgage broker about how shifting investor activity in your area could affect valuations and your negotiating position, alongside your own borrowing capacity and deposit timeline.

Run the numbers

Before you decide whether now is the right time to buy an established home or wait, it is worth checking your own position against current settings using these tools:

• Borrowing Power Calculator - work out roughly how much you may be able to borrow if you are weighing up making an offer sooner rather than later
• Grant Stacker - see which grants and concessions you may be able to combine on an established home versus a new build
• Scheme Comparison Tool - compare how the main first home buyer schemes apply differently to established and new-build purchases