Secret takeaways For the very first time in over 20 years of tape-recorded information, more rental bonds are being refunded in Victoria than lodged, implying rental supply
is in fact contracting. Land tax limit changes, over 130 brand-new tenancy regulations, and increasing holding expenses have actually pressed lots of investors to offer up, particularly those without strong capital buffers.
Residence offered by leaving proprietors are mostly being acquired by owner-occupiers, permanently eliminating them from the rental pool instead of assisting occupants.
Melbourne’s rental vacancy rate is sitting at 1.5%, well below the 3% level thought about balanced, and rents are continuing to increase.
Financiers who hold quality, well-located possessions through this duration of unfavorable sentiment are placing themselves to benefit as rental supply tightens even more and the next phase of the Melbourne cycle plays out.
New-build rewards carry genuine risks – tax concessions can enhance short-term returns on paper however can not replacement for strong place principles.
The case for staying purchased Melbourne’s inner and middle-ring suburbs remains sound for investors with the monetary buffers to ride out the existing environment.
Something unusual is happening in Victoria’s rental market, and it has no historical precedent in over two decades of taped data.
For the very first time because the Residential Tenancies Bond Authority began tracking bond lodgements, more rental bonds are being refunded than lodged.
In other words, rental homes are leaving the market faster than they’re entering it.
And in my mind, this data point tells you which way rents in Victoria are heading.
In the March 2025 quarter alone, there were 3,398 more bond refunds than new bond lodgements across Victoria.
That’s countless rental homes removed from the pool in a single quarter, in a state that typically sees a steady flow of new occupancies opening to take in population growth.
And the pattern has actually been constructing for a long time.
Why are property managers leaving? This isn’t a story about property managers being weak or short-sighted. As I see it, it’s a story about what happens when federal governments keep shifting the goalposts.
Since January 2024, Victoria’s land tax limit dropped from $300,000 to simply $50,000, suggesting even small-scale investors were struck with assessments thousands of dollars greater than in previous years.
Add the COVID financial obligation additional charge on top of that – a “short-term” levy that has turned out to be anything but short-term – and the holding expenses for Victorian investment properties have risen considerably.
On top of land tax, landlords have been navigating over 130 new policies presented since 2021, covering everything from compulsory security checks to constraints on rent increases and notice durations.
Many proprietors enjoy to do the right thing, however numerous now feel they’re being treated as the issue instead of as part of the service to Victoria’s housing requirements.
Uninhabited residential land tax has actually also broadened, applying statewide from 2025 to any home that sits empty for more than six months in a fiscal year, despite whether it remains in Brunswick, Geelong, Ballarat or a little local town.
Research company and residential or commercial property platform FoundIt’s Ex-Rental Market Pressure National Report revealed financiers listed 1663 previous rental residential or commercial properties in Victoria in Might, while investors bought 1021 properties during that month.
Realestate.com.au reports that numerous investment properties have actually been auctioned off given that the most recent round of land tax hikes, with reports of 140 investment properties going under the hammer in Craigieburn alone and 100 in Tank.
And much of these were offered not since the residential or commercial properties were poor quality, but because the ongoing cost of holding them simply stopped making sense for investors without strong capital buffers.
The uncomfortable fact about where those residential or commercial properties go
Some commentators have actually framed the investor exodus as excellent news for real estate cost, suggesting it opens the door for first-home purchasers.
Now there may be a grain of truth because for a narrow group of purchasers.