Rising portfolio costs are reshaping investor strategies, as tougher lending rules and rental reforms make it harder to scale beyond one or two properties. This retreat by big landlords could worsen already tight rental supply.
Over the five years to 2023, the number of Australians investing in property has edged up from about 2.21 million to 2.26 million, yet the share of those building big portfolios is slipping as conditions become more demanding. Most investors now appear comfortable owning just one rental and treat it as a long term wealth or retirement play rather than a springboard to becoming a “mega landlord”. That shift is gradually changing the shape of the rental market.
The latest tax data shows that around 72% of property investors, about 1.62 million people, own only a single rental home, while the ranks of larger players are shrinking. Investors with a stake in five properties have fallen by just over 5% to roughly 18,800 and those with six or more are down nearly 7% to about 19,400. Industry groups point to a mix of factors behind this trend, including higher interest rates since 2022, steeper land tax in some states, new compliance demands and rising maintenance and trades costs, all of which eat into cashflow and discourage expansion.
Banks and regulators are also making it harder to keep borrowing. Stricter serviceability tests, conservative loan modelling and tighter credit policies mean many investors reach a “borrowing wall” after their first or second purchase even if they want to keep going. Larger portfolios now require bigger deposits, higher stamp duty outlays and stronger income buffers, so owning multiple properties has become far more capital intensive than it was a decade ago. At the same time, a growing cohort of older investors are using today’s prices to de risk by selling down to fund retirement or by shifting wealth into superannuation and other assets that do not attract maintenance or land tax bills.
Some of the apparent decline in mega landlords comes from investors changing how they own property rather than leaving the market altogether. More sophisticated and higher net worth investors are increasingly using companies, trusts or self managed super funds, structures that are not fully captured in individual tax statistics. Self managed super fund property holdings, for example, have grown from about $163 billion in 2019 to around $219 billion in 2024, with commercial real estate making up the bulk while residential remains a relatively small slice. Even so, advisers say those with multiple properties in any structure are still facing heavier holding costs and tighter borrowing conditions than earlier generations did.
For the broader housing market, this slow retreat by large personal landlords looks like a double edged sword. On one hand, smaller and more cautious investors may spread risk more evenly and reduce exposure to over leveraged portfolios. On the other hand, fewer people who are willing or able to own several rentals could limit the private supply of housing, especially when investors already provide the great majority of rental stock. The trend is not uniform across the country either. In some states with tougher rental reforms and added landlord obligations, investor surveys suggest owners are exiting more quickly and this raises the risk that rental shortages and affordability pressures could become even harder to resolve.
