The Landlord Exodus: What 20 Years of Property Investing Taught Me About This Moment

There is a landlord exodus underway in Melbourne right now, and what you should do may feel counter-intuitive.

In all our decades operating in Melbourne’s luxury property market, we haven’t seen this many clients off-loading investment properties at the same time.

It’s in response to years of mounting taxation and regulatory burden, worsened by November’s rental reforms. The combination of increased costs, reduced rights and an increasingly arduous management process has fundamentally changed the calculus for property investors.

Good, long-term tenants who’ve lived in the same property for years, are receiving notices to vacate. Not because they’ve done anything wrong, but because their landlords have had enough.

And the result is a lot of apartment stock on the market. A subdued market.

The rental crisis this creates is real and immediate. At our recent open for inspections, we’ve had to cap attendance at 50 people per property. That’s not a queue for a desirable apartment in a hot market – that’s desperation from renters displaced by investor sell-offs, scrambling to find their next home.

The Other Side of the Story

But here’s what’s interesting: while local investors are fleeing, we’re starting to see expats and interstate buyers move in. They’re investors who aren’t spooked by Victoria’s tax settings or regulatory environment because they’re playing a different game. They’re betting that Melbourne’s capital growth, which has been modest for years, will eventually reassert itself. And they’re willing to absorb the short-term tax hit to position themselves for that upswing.

Melbourne has posted positive growth for three to four months now. Nothing significant, but it’s growth nonetheless. And for those paying attention, that’s the signal.

The Contrarian Play

After 20 years in this industry, I’ve learned one thing: when everyone is running for the exits, that’s usually the time to walk in.

The negative sentiment creates opportunity – particularly in a market where the fundamentals are strong like Melbourne. While the regulatory environment may be challenging, Melbourne has strong population growth, world-class infrastructure and a diversified economy.

If you hold an investment property, the advice might feel contrarian – you want to get out, but actually you should consider holding. With less rental stock on market (because first homebuyers are currently incentivised to move in), rents are going up. The extra pain should start to be offset by financial gain.

And contrarian investors are positioning themselves for long-term benefit.

It’s about recognising when a market has been oversold by sentiment rather than fundamentals.