Is This the Beginning of the Great Investor Exodus from Victoria?

Something significant is happening in Victoria’s rental market, something we haven’t seen in over two decades.

And while it hasn’t made big headlines just yet, if you read between the lines, it points to a worrying trend for renters, a turning point for policymakers, and a potential opportunity for long-term investors who know how to read the market.

The latest data from Victoria’s Residential Tenancies Bond Authority (RTBA), as recently reported on abc.net.au, has quietly revealed a tipping point: more rental bonds are being refunded than lodged.

Source: abc.net.au

Now, that might sound technical, but here’s what it means in plain terms:

More rental properties are being removed from the rental market than are being added.

This hasn't happened since the RTBA started recording this data over 20 years ago.

It’s not just unusual, it’s unprecedented.

And for those of us who’ve spent decades watching the ebbs and flows of Australia’s property cycles, this is more than just a blip.

It’s a signal.

Let’s break down the numbers

In the March 2025 quarter, there were 3,398 more bond refunds than new bond lodgements in Victoria.

Source: abc.net.au

To put that in perspective, Victoria usually sees a positive balance, with more new tenancies starting than ending.

That’s how a growing rental market should behave, especially in a state with strong population growth, thanks to immigration and internal migration.

But this time?

The numbers are upside down.

And it’s not just a single-quarter anomaly.

The trend has been building for months.

Real estate agents and property managers have been reporting a growing number of landlords choosing to sell up, and now the data backs it up.

Why are investors exiting?

This trend didn’t come out of nowhere.

It’s the result of a perfect storm of pressures that have made it increasingly unattractive - if not outright unviable - for many property investors to hold onto their assets.

Here are the key factors driving this exodus:

1. Increased interest rates

With the RBA increasing the cash rate twelve times between May 2022 and November 2023, many landlords have seen their mortgage repayments double.

While rents have risen, they haven’t kept pace with rising costs, especially for those on variable rates or with high LVR loans.

2. Land tax shock

Victoria’s “temporary” COVID debt levy has been anything but temporary.

In fact, from January 2024, many landlords received land tax assessments that were thousands of dollars higher than in previous years.

The government’s decision to lower the tax-free threshold from $300,000 to $50,000 meant even small-scale investors were hit.

Add in the flat surcharge for higher-valued landholdings, and the cost of holding property in Victoria has risen dramatically.

3. Regulatory overload

Since the Residential Tenancies Act reforms were introduced in 2021, Victorian landlords have faced over 130 new regulations, from mandatory safety checks to restrictions on rent increases and notice periods.

Most landlords are happy to do the right thing, but many feel they’re now being treated like adversaries, rather than valued housing providers.

4. Policy uncertainty

Talk of rent freezes, rent caps, and further legislative reform has spooked many investors.

Regardless of whether these policies come to pass, the uncertainty alone creates anxiety, especially for risk-averse investors.

Combine these with rising insurance premiums, council rates, and maintenance costs, and it’s easy to see why many landlords have said, “Enough is enough.”

So what happens now?

Some tenant advocates are celebrating this trend, suggesting it could help first-home buyers get a foothold in the market.

But here’s the reality: most of the properties being sold by investors aren’t going to renters—they’re being bought by owner-occupiers and not necessarily first home buyers.

That means they’re being permanently removed from the rental pool.

So, while this might help a handful of aspiring homeowners, it creates a net loss of rental supply, which puts upward pressure on rents.

And that’s already playing out:

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• Melbourne’s vacancy rate is just 0.9% according to SQM Research—a level that’s well below the equilibrium point.

• Asking rents have risen by over 20% in some suburbs in the past 12 months.

• Tenants are offering above the asking rent, paying months in advance, or lining up in queues just to inspect properties.

In other words, renters are competing harder for fewer homes, which is precisely what the policy was supposed to avoid.

The long-term opportunity for strategic investors

While the headlines are painting a picture of doom and gloom, savvy long-term investors will recognise this environment for what it truly is:

A clearing-out of less committed landlords that will tighten supply, lift yields, and create opportunities for those who know what they’re doing.

Here’s why:

• Less competition means fewer investors bidding up prices on quality assets.

• Rising rents improve gross yields and cash flow, especially for those who bought before interest rates peaked.

• The pipeline of new housing is drying up, thanks to high construction costs, labour shortages, and development delays.

• Population growth is rebounding, particularly in Melbourne, which remains Australia’s fastest-growing city.

This is a moment for clarity, not panic

Yes, it’s harder to be a landlord in Victoria today than it was five years ago.

Yes, there are legitimate frustrations with how investors are treated by policymakers and media alike.

But let’s not forget the core principle of property investment: we invest for long-term capital growth and income, not short-term convenience.

Markets go through cycles. Regulations come and go. Taxes shift.

But the value of owning quality assets in land-locked, supply-constrained suburbs never goes away.

If you sell now because of temporary headwinds, you may find yourself locked out of a tightening market with rising prices and fewer opportunities.

What should you do?

If you’re feeling the pressure, you’re not alone.

But this is where you need a plan, not panic.

Here’s what I recommend:

 1. Review your portfolio

Assess your current holdings. Are they truly investment-grade?

Or are you holding underperforming assets in the hope they’ll eventually catch up?

2. Get strategic advice

Now is not the time for guesswork.

Speak to a Wealth Strategist at Metropole who understands both the macro environment and your personal goals. - you can organise a complimentary Wealth Discovery chat here.

 3. Optimise your structure

Work with your accountant to explore tax planning, structuring options, and cost mitigation strategies.

There are legal ways to ease the burden, but you need expert help.

 4. Stay educated

Block out the noise.

Be careful who you listen to there are always property pessimist out there.

Follow the trends that matter—demographics, supply pipelines, infrastructure spending—not just headlines.

5. Think long term

Remember: fortune favours the patient.

The next phase of the Melbourne property cycle will reward those who held firm at a time when others walked away.

Final thoughts

What we’re witnessing isn’t the death of property investment in Victoria—it’s the recalibration of a market that got a little too complacent.

Some landlords are leaving. That’s fine.

But those who stay, who adapt, who hold the right assets in the right locations—they’re setting themselves up for a decade of wealth creation.

The property market has always rewarded resilience, foresight, and strategy.

And right now, it's giving strategic investors the chance to step in while the rest of the crowd steps back.