Investor activity in Southeast Queensland’s property market has seen a significant decline, with the number of offers from investors dropping by over 20 per cent. This downturn is attributed to growing speculation about potential changes to negative gearing and the Capital Gains Tax (CGT) discount in the upcoming Federal Budget. The shift in investor behaviour is already impacting the region’s rental market, which is experiencing historically low vacancy rates.

According to new data from Image Property, which analysed more than 5,000 offers received between 1 July 2025 and 30 April 2026, there has been a marked retreat in investor participation. The data reveals that between July and December 2025, investors accounted for 28 per cent of all offers on Image Property listings. However, since the start of 2026, this figure has fallen to 22 per cent, marking a 21 per cent decline at a time when rental supply is critically constrained.

Joel Davis, Managing Director of Image Property, pointed out that the downturn in investor activity is directly linked to the Federal Government’s signals about potential cuts to negative gearing and the CGT discount. “The moment the government began signalling possible cuts to negative gearing or the CGT discount, investor confidence took a hit across Southeast Queensland,” Mr Davis said. He further explained, “We’re seeing investors pause, hesitate or withdraw entirely and that hesitation is already flowing through to reduced rental supply. This is not sentiment or theory – it’s real-time behavioural change across thousands of transactions.”

The decline in investor participation comes at a time when vacancy rates across Southeast Queensland are at historic lows. Current figures show Greater Brisbane with a vacancy rate of around 0.9 per cent, while both the Gold Coast and the Sunshine Coast are at one per cent. These rates are significantly below the healthy range of 2.6 to 3.5 per cent, indicating a severe shortage of available rental properties.

Mr Davis expressed concern about the impact of reduced investor activity on the rental market and young people trying to secure housing. “Reduced investor activity will only deepen the crisis if the mooted tax reforms become a reality next week,” he warned. He added, “If investors continue to step back, vacancy rates will tighten even further and rents will rise. Young people will be squeezed hardest and not just in the rental market, but in their ability to save for a first home.”

The potential tax reforms have sparked a debate about the best way to address the rental supply crisis. Mr Davis argued that the Federal Government should focus on incentivising new supply rather than deterring it. “The government has consistently struggled to deliver new rental supply, so if investors desert the market, where exactly is the new stock going to come from?” he questioned.

He suggested that maintaining the CGT discount and preserving negative gearing, at least for investors who buy or build new stock, would be a more effective strategy. “Maintaining the CGT discount and preserving negative gearing – at least for investors who buy or build new stock – would directly support the creation of additional rental homes,” Mr Davis said. “If the goal is more supply, policy should reward the people actually providing it.”

As the Federal Budget announcement looms, the real estate sector in Southeast Queensland is bracing for the potential impact of tax reforms. The uncertainty has already caused a noticeable shift in investor behaviour, raising concerns about the future of the region’s rental market and the broader implications for housing affordability. With vacancy rates at critical lows and rental prices on the rise, the need for clear and supportive government policy is more pressing than ever.