Melbourne Sees Surge in Ex-Rental Listings Post-Tax Changes

Victoria’s property market is experiencing a notable shift in investor activity, with new research showing fewer investors buying established homes while more attention is moving toward newly built properties. At the same time, Melbourne’s rental market has tightened further, pushing the median advertised rent to a record $600 per week.

According to the latest PropTrack–Terri Scheer Investor Report, investor activity across Australia has softened after a very strong 2024 and 2025. The number of investor loans fell 9% in the June quarter, compared with a 3% decline for owner-occupier loans. Rising interest rates have reduced borrowing capacity, while recent changes to housing tax settings have also made established investment properties less attractive to some buyers.

Victoria stands out because investor activity remains below its longer-term average, and Melbourne has seen a particularly large share of former rental properties being listed for sale. More than 40% of newly listed Melbourne homes were linked to investors selling, according to recent reporting based on the PropTrack report.

This reduction in investor ownership is having consequences for tenants. Melbourne’s median rent has risen 5.3% over the past year to $600 per week, with rental availability remaining tight. Fewer rental properties entering or remaining in the market can increase competition between tenants, particularly in areas where population growth and household formation remain strong.

For Melbourne’s western growth corridor, the trend could be especially important. Areas with strong population growth, newer housing and relatively affordable rents already attract families, new migrants and younger households. If investor participation continues to fall, tenants may face fewer choices and greater competition for available properties.

At the same time, the changing investor landscape may create opportunities for owner-occupiers. If more former rental properties are placed on the market and fewer investors compete for established homes, first-home buyers and families may face less investor competition when purchasing existing properties.

The situation for investors, however, is more complex. While established homes have become less attractive under the new policy settings, demand for new housing has increased. PropTrack reported that investor loans for buying or building new homes rose 24% in the June quarter, even as overall investor lending declined.

This shift is significant for Melbourne’s western growth corridor because the region contains many new estates, house-and-land packages, townhouses and newly completed dwellings. Investors who still want exposure to residential property may increasingly focus on these newer properties, particularly where rental demand and population growth remain strong.

Higher rents can also improve rental yields, but investors still need to consider financing costs carefully. Interest rates remain elevated, and stronger rental income does not automatically guarantee positive cash flow once mortgage repayments, maintenance, property management fees, insurance and other holding costs are included.

For tenants, the current environment may remain challenging if rental supply continues to shrink. Strong demand combined with fewer available properties can place upward pressure on rents and reduce the time renters have to secure suitable accommodation.

For sellers, the shift away from established investment properties may also change the type of buyer they are targeting. Properties that previously appealed strongly to investors may need to be marketed more toward owner-occupiers, first-home buyers and families.

Overall, Victoria’s investor exodus is reshaping both the sales and rental markets. For Melbourne’s western growth corridor, the result could be fewer rental options and higher rents for tenants, reduced investor competition for established homes, and stronger interest in newly built properties.

The market is becoming more segmented, with different opportunities emerging for tenants, owner-occupiers and investors. Understanding whether demand is being driven by rental need, first-home buyers or new-build investment will be increasingly important when assessing individual suburbs across Melbourne’s west.