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In a tight rental market the landlord temptation might be to squeeze out as much rent as possible but tenant expectations are rising, property standards are under scrutiny, and compliance requirements are increasingly strict.

Investors are being told this is a boom. In reality, it’s a bottleneck and unless you play it smart, you’ll likely feel the squeeze.

Australia’s rental markets aren’t just “tight.” They’re under serious strain, with vacancy rates at historic lows and tenant demand outpacing available housing in almost every major city and region.

From the outside, it might look like the perfect conditions for landlords and property investors, but the reality is far more complex.

Strong rents, stronger pressure

Yes, rental prices are rising and properties are leasing faster than ever. Brisbane, for example, has recorded rental increases of over 10 per cent in some inner and middle-ring suburbs, and regional areas aren’t far behind.

National vacancy rates are sitting around 1.1 per cent, well below the 2–3 per cent usually considered a balanced market.

But these figures only tell part of the story. A tight rental market isn’t always a profitable one. It’s a high-stakes environment where tenant expectations are rising, property standards are under scrutiny, and compliance requirements are increasingly strict.

From where I sit, this market rewards those who are proactive, well-informed and strategic, not those relying on luck or assumptions.

What’s fuelling the rental tightness?

Several forces are combining to create this pressure. Net overseas migration reached nearly 380,000 in the year to September 2024, returning to (and even surpassing) pre-pandemic levels. Most new arrivals are renters, at least initially, adding to already intense demand.

At the same time, the supply pipeline is very tight.

Construction delays, labour shortages, and elevated material costs have slowed the delivery of new housing. In some states, new dwelling starts have fallen well short of population growth. Add to that the hesitancy of some investors to buy in during a high interest rate environment, and the supply side continues to fall behind.

This imbalance is what defines a tight rental market: low vacancy, high demand, and limited supply.

Tenant behaviour: competition and caution

We’re seeing more tenants than ever applying for each available property. It’s not unusual to receive 20 to 30 applications within days of listing. Some are offering to pay above asking price or several months in advance just to secure a lease.

But it’s not just competition that’s changing, it’s also their expectations.

Tenants are more discerning, they’re prioritising well-maintained, energy-efficient homes. They’re also staying longer in leases when they can, avoiding the uncertainty and stress of trying to re-enter a competitive market.

It’s a clear signal to investors: presentation and maintenance are no longer optional. Even in a tight market, quality properties attract the best tenants and retain them.

Investor challenges: profit and pressure

For landlords, this environment presents a new kind of dilemma.

On the one hand, rents are rising. On the other, so are insurance premiums and maintenance costs.

Many investors are asking themselves: how much can I increase the rent without losing a good tenant? How do I manage repairs when trades are booked out for weeks? Should I upgrade the property, and if so, where will I get the best return?

There’s also regulatory pressure. In several states, reforms around rent increases, eviction processes, and minimum property standards are changing how landlords operate.

Navigating these without expert guidance adds to the administrative burden and increases risk.

Opportunities still exist, but they require strategy

Despite the challenges, tight rental markets also create strong opportunities for investors who take a long-term view.

Lower vacancy means fewer days on market. Higher demand means the ability to choose reliable, well-qualified tenants. Rising rents, if handled responsibly, can improve yield and cash flow.

But the key is not to overreach. Investors who focus on property condition, tenant relationships, and compliance are better positioned to weather any market shifts. Those who treat property management as a partnership, rather than a passive process, typically see stronger performance over time.

Beware: markets like these don’t last forever.

When supply eventually increases there will be greater scrutiny on which properties justify a premium and which fall to the bottom of the list.

The investors who succeed won’t be the ones who charged the highest rent in a hot market. They’ll be the ones who retained quality tenants, kept their properties competitive, and planned ahead.

The market is rewarding those who manage well, not just those who own property.

So, while tight rental conditions may sound like an open goal for investors, they’re anything but simple. Behind every strong rent figure is a balancing act and those who recognise that reality will be best placed to succeed, no matter what comes next.

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The outer fringes of Melbourne are the sole drivers of the property market in the city, as buyers compete for affordable options but largely steer clear of apartments.

he broader Melbourne property market remains in the doldrums — despite ongoing forecasts of a revival —but the city’s outer suburbs are being underpinned by relative affordability.

In the year to April, inner Melbourne was a sea of red ink, with just 4 per cent of suburbs recording price growth, according to Cotality, formerly CoreLogic.

Yet for suburbs 20km or more from the CBD, 38 per cent of suburbs saw growth during the year, as stretched affordability pushed buyers further afield.

Cotality Research Director Tim Lawless said the trend was reflected nationally, as strong capital growth “clustered in city outskirts”, where home values remained “just” within reach for many Australians.

“Households are making pragmatic decisions in response to tighter borrowing capacity and higher mortgage costs,” Mr Lawless said.

“That’s pushed demand towards the lower quartile of the market, and it’s across the outer suburbs that this value-driven demand is translating into the strongest growth.

“The trend is visible in every capital city,” he said.

It has certainly been the case in Brisbane, Sydney and Perth.

In Melbourne, the Hume, Frankston and Casey local government areas were “emerging as standout performers,” Mr Lawless said.

Over the year to 1 May, Tullamarine and Broadmeadows in the city’s north-west recorded the strongest price growth, at 1.9 per cent, taking the median dwelling value to $687,701.

Frankston on the Mornington Peninsula recorded the second highest price growth in the year, with dwellings rising 1.8 per cent to a median of $763,366.

Apartment oversupply

For Melbourne as a whole, prices grew 1.2 per cent in the three months to 1 June, but fell 1.2 per cent for the year.

Ashley Pollerd, Director of Melbourne-based buyers’ agency AJP Buyers Agents, said the relative affordability of Melbourne’s outer suburbs was drawing first home buyers and young couples.

“These (outer suburb) markets are well prices for first time buyers or upgraders including young families and those able to work from home and not needing to be in the city every day,” Mr Pollerd told Australian Property Investor Magazine.

He said the outer suburban markets were popular among investors seeking to buy houses, rather than apartments, which can suffer from oversupply, particularly in some inner-city markets.

“The outer suburbs, especially those well clear of the growth corridors of new supply, is why places such as Frankston and the Mornington Peninsula are attractive to owner-occupiers, tenants and investors,” Mr Pollerd said.

“They are priced well for investors including interstate buyers who are seeing growth value in Melbourne’s outer suburbs for houses.

According to Cotality, across Melbourne, the median dwelling value is $791,303 — down 4.5 per cent from its peak in March 2022 — with the prospect of growth drawing investors from interstate.

“Markets such as Perth have become very hot whilst Melbourne offers an option to get in at the bottom of the property clock,” Mr Pollerd said.

The likelihood of significant further interest rate cuts and a shortage of supply would support future growth.

Mr Pollerd said Melbourne suburbs offering the best prospects for capital growth included Frankston; Ferntree Gully in the city’s outer east; Pascoe Vale in the city’s north; Cheltenham, about 18km south-east of the CBD; and Elwood, in the city’s inner south-east.

According to Cotality, across Melbourne, dwelling values have grown 43.8 per cent over the past decade, which was the lowest rate of growth of any major capital.

Yet gross rental yields in the city — the annual rent return as a proportion of a property’s value — were the second lowest in the nation behind only Sydney, tying with Brisbane and Adelaide, at 3.7 per cent.

“Melbourne has seen a sharp drop in annual rental growth, easing from 9.4 per cent to 2 per cent, while Sydney rents are now rising just 1.9 per cent per annum, the slowest annual rise since April 2021,” Mr Lawless said.

“Population growth, which is a proxy for housing demand, has fallen back to the decade average of 0.4 per cent per quarter.

“Less population growth should help to take some heat away from housing value growth, but there is still a substantial cumulative undersupply that has accrued over the past few years.”

Geoff Oxford, Director, Seachange Property, said houses in Frankston, Frankston South and Mornington priced between $600,000 and $1.2 million were “selling like hotcakes”.

“You just can’t get enough of that type of property,” Mr Oxford told API Magazine.

But it was a very different story at the top end of the market on the Mornington Peninsula, where government taxes, including land tax, vacancy taxes and short-term rental taxes were weighing heavily on the market.

“Houses that were selling in Mount Martha in 2021 for over $4 million are now selling for just over $3 million,” Mr Oxford said.

The number of people viewing more expensive properties were “down 80 per cent on last year”, with that market “almost dormant”.

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Property investors seeking capital growth in Brisbane will continue to make gains in the outer suburbs but other property types and hotspot areas are springing up.

Property owners looking for capital growth would have to be unlucky not to have enjoyed an increase in their home value in Brisbane.

Only 2 per cent of suburbs across the metropolitan region recorded a decline in dwelling values over the past 12 months.

Like elsewhere in Australia, the bulk of that price growth is occurring in the outer suburbs.

According to Cotality (formerly CoreLogic), values across the lower quartile of the Brisbane market are up 14.0 per cent over the past 12 months compared to a 4.8 per cent rise in values across the upper quartile.

Across the top 20 suburbs recording the highest annual gain in values, 17 were located at least 20km from the Brisbane GPO, with more than half (11) of the top 20 located within the Ipswich LGA.

Brisbane UNITS: Median Sales Data by annual change – March Qtr 2025

Brisbane HOUSES: Median Sales Data by annual change – March Qtr 2025

(Source: REIQ, for API Magazine)

The real estate affordability pressures that have driven buyers to seek value ever further from the city centre are showing no signs of abating and Tuesday’s (20 May) interest rate cut could fuel even greater demand among buyers for whom every dollar counts.

Yet, as Brisbane’s cheaper suburbs continue to propel the city’s 7.8 per cent annual median dwelling value growth (third to Perth’s 10 per cent and Adelaide’s 9.8 per cent), other market segments are emerging as potential new property hotspots.

Nationally, despite affordability issues, houses (up 1.1 per cent over past three months) continue to outperform units (0.5 per cent). Brisbane, like Perth, is an outlier where units (1.6 per cent) are providing stronger returns than houses (0.9 per cent).

On an annual basis, units are almost doubling house price growth, with the former up 12.8 per cent and the latter by 6.8 per cent.

Hotspot suburbs to watch

Buyers are still eager to be in closer proximity to the city, according to Nick Meredith, Buyers Agent, The Property Baron.

“Anything under $1.5 million in the inner suburbs is extremely competitive and getting harder to find and demand for entry level units is also very strong.

“But the growth in the outer suburbs will continue to be strong over the rest of this year and likely into 2026.

“If we have another 2 or 3 interest rate drops this year, buyers’ borrowing capacity will increase and people will be prepared to spend more and put fuel on the fire that will result in these markets growing at a similar rate to what has been happening over the last 12 months.”

Mr Meredith said any areas around the 2032 Olympic venues or those benefiting from the big infrastructure projects in the lead up to the Games will be areas to watch.

Healthier rental yields were also attracting investors to some of Brisbane’s outlying suburbs.

Peter Ly, Principal Buyers Agent, Australian Property Experts, said he expected the rate of growth will start to slow down in these outer suburbs but was not going away.

“We are still years away from any market decline in these areas as population growth continues, infrastructure projects are completed, and rental demand keeps up.

“Brisbane’s outer suburbs offer better affordability and higher rental yields, both of which buyers are prioritising in this still-high interest rate environment.

“With the current interest rates and borrowing capacities stretching household budgets, buyers, both investors and home owners, are being left with no choice but to look for value in outer suburbs in and around the council areas of Ipswich, Logan, and parts of Moreton Bay.”

Six suburbs he identified as presenting the best value for investors seeking capital growth into 2026 and beyond were East Ipswich, Raceview, Springfield, Caboolture South, Griffin and Waterford.

Size matters with smaller home types

A similar view was expressed by Patrick Ryan, Director of Local Knowledge Buyers Agent in Brisbane, who said the Local Government Areas of Moreton Bay, Redlands and Ipswich are experiencing increased demand due to their affordability, strong local economies, good transport infrastructure, services and lifestyle amenities.

“The availability of larger land parcels in some of the outer suburbs when compared to the inner suburbs, healthy rental yields and strong potential for future capital growth also contribute to this performance,” he said.

The same cohort of prospective buyers who stand to gain most from falling interest rates could find their potential gains erased by rising property prices responding to the better financial conditions.

“Further interest rate cuts and first homebuyer government incentives will stimulate competition amongst first home buyers and young families, as well as investors, buying in the outer suburbs.

“Demand and affordability along with improvements to infrastructure, employment opportunities, services and lifestyle amenities will also help to maintain this trend in the short term.”

Brisbane’s infrastructure evolution was what buyers seeking capital growth should be evaluating, Mr Ryan added.

“Alongside suburbs set to benefit from the Brisbane 2032 Olympics, suburbs targeted in Brisbane City Council’s Suburban Renewal Precinct Plans also offer investors the opportunity to benefit from specific local investments aimed at enhancing lifestyle and liveability.

“If history is a guide, investing in these suburbs ahead of the curve can reap rewards, including Wynnum, Mount Gravatt and Stones Corner.”

For houses, Mr Ryan said scarcity and land value will continue to drive upward price growth.

“As a result, detached post-war homes (renovated and unrenovated) in well-established Brisbane suburbs in the inner-eastern and bayside areas of Brisbane on land over 600sqm in the sub-$1.5 million bracket will be a solid performing market segment over the next year or so.”

For other building types, larger apartments and townhouses were the best option.

“Downsizers and professionals will continue to target large boutique apartments in smaller complexes in inner-city suburbs of Brisbane, due to their facilities, accessibility and proximity to lifestyle amenities and services.

“Spacious three-plus bedroom townhouses in lower density developments located in desirable inner and middle ring suburbs of Brisbane with functional outdoor areas and an additional living area should see strong growth,” he said.

Article Q&A

Three-bedroom apartments are meeting a growing demand from numerous segments of the property buying market, from downsizers to young families and first home buyers, but supply is scarce.

Over the past five years, houses have statistically outperformed units in every capital city across Australia.

As a result, houses are often seen as the safer and superior investment.

But analysing the market across all major cities, I’ve observed an emerging and promising shift: the growing appeal and performance of three-bedroom, family friendly units.

While two-bedroom units remain abundant, the demand for more spacious and practical living has become apparent.

A new segment of buyers is now competing for a limited supply of three-bedroom units, particularly in lifestyle locations and areas close to the coast.

First home buyers who have been priced out of the detached housing market are seeking alternatives that offer room to grow, not just a stepping stone property.

Likewise, downsizers, particularly empty nesters, are selling the family home but still want sufficient space for children, grandchildren or visiting guests.

What I’m seeing, in particular is increasing competition from a diverse pool of buyers, not just apartment hunters, but also those traditionally in the market for villas or townhouses.

Three-bedroom units, especially those designed with families in mind, are becoming a serious consideration. In my valuations, I’ve seen notable demand in coastal suburbs and lifestyle pockets that attract millennials and young families.

These buyers are seeking access to lifestyle, community and amenities without the million-dollar price tag of a freestanding home.

To many of them, proximity to a beach, park or cafe precinct is seen as their backyard. As such I’ve seen a healthy increase in market value.

Too many cookie-cutter apartments

Not just any three-bedroom unit will do. To meet demand and achieve strong market performance, these properties must meet a certain standard.

Family-friendly doesn’t just mean three bedrooms on paper, it means functional design.

Ideally, the configuration includes three genuine bedrooms, two bathrooms, and a double car space. Outdoor space is also crucial a decent sized balcony that can comfortably fit a BBQ and a small table setting. It’s the little details that set a unit apart and make it feel like a home.

The market is telling us what it wants. Yet much of the current high and medium-density development continues to focus on cookie-cutter two-bedroom apartments that flood the market and lack long term desirability.

There is a clear opportunity here for developers to shift gears and meet this growing demand head on.

If we start designing and building more family friendly apartments, not only could we better serve the changing needs of buyers, but we could also contribute to addressing the housing crisis in a meaningful and sustainable way.

For governments and policymakers, the focus should not just be on incentivising buyers to purchase new for the sake of it, but rather on encouraging developers to build the types of homes that people actually want to live in long term.

Family-friendly apartment design is not a niche; it’s a growing segment that represents the real-life demands of modern Australian households.

In the race to solve housing supply and affordability, let’s not just build more. Let’s build better. Three-bedroom, family-friendly units, well designed and well located, might just be a big part of the answer.

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A great divide has emerged in the Sydney property market when it comes to price growth but will the gulf between the inner and outer suburbs continue into 2026?

A divide in the Sydney property market has evolved into a major gulf.

Three quarters of suburbs within five kilometres of central Sydney have recorded property prices falls in the past 12 months.

A complete reversal in fortunes is playing out in the more affordable outer areas, with four in every five suburbs more than 20 kilometres from the Sydney GPO clocking up price gains.

It’s a scenario that is playing out in a similar pattern around the country but Sydney’s far higher property prices have made the trend more emphatic in the Harbour City.

Reinforcing the extent of the great divide, all of the top 20 suburbs for annual growth were at least 20km from the CBD, with Fairfield, Liverpool and Blacktown LGAs dominating the city’s top 20 list.

New Cotality (formerly CoreLogic) data confirms the nation’s strongest housing conditions are concentrated in the fringes of each capital city.

The lower quartile of the housing market has led capital growth over the past 12 months, reflecting heightened demand for more affordable homes as buyers navigate continued serviceability constraints and stretched affordability metrics.

With the median priced property in Australia now out of reach for the median income earner, who would need to dedicate over half of their income to a mortgage (after paying a 20 per cent deposit), buyers are being forced to the fringes.

That situation is more pronounced in Australia’s largest and most expensive property market.

Jason Simoes, Director, XS Property, said the outer suburbs are offering better value per square metre, larger land sizes, and often more modern housing stock.

“Additionally, infrastructure investment across LGAs like Fairfield, Liverpool and Blacktown is improving transport links and amenities, helping to close the housing gap between inner and outer areas.”

He identified the five areas that stood to be the main beneficiaries of this investment in terms of delivering more capital growth over the next few years.

Sydney’s highest 12-month value growth (dwellings)

“Seven Hills is benefiting from the ripple effect out of Blacktown and solid transport links.

“Campbelltown is being boosted by major infrastructure plans and urban renewal projects, while Riverstone has strong population growth and is part of the North West Growth Area.

“Kingswood, close to Western Sydney University and Nepean Hospital, is attracting tenants and owner-occupiers, which is a lure for property investors.

“Closer to the city, Belmore in the Inner South-West is still relatively affordable, with increasing appeal as buyers look for value within 15km of the CBD.”

Sydney values remain 1.1 per cent below their September 2024 high but 81 per cent of suburbs 20km or more from Sydney’s GPO recorded annual gains, compared with only 26 per cent of those within 5km.

Greater competition for these appreciating outer suburban homes and the newer, more modern homes would continue to drive prices higher, according to Allen Habbouchi, Principal Licensee – Sydney, aussieproperty.com.

“This shift in demand often contributes to heightened competition and subsequent price growth in these more affordable markets.

“Outer suburbs often provide larger homes, more land, and access to greener spaces, which appeal to families and individuals seeking a higher quality of life, especially with the rise of remote work.

“Sydney’s population growth and urban sprawl have led to increased demand for housing in outer areas, supporting strong market performance, along with the changes in lifestyle preferences, especially post-pandemic, that have increased demand for properties outside the city centre.”

Mr Habbouchi said investors see outer suburbs as offering higher potential for growth and better rental yields, fuelling further activity and the need for more development in these areas to cope with the lack of properties currently available in Sydney.

For buyers looking for price gains in 2025 and beyond, he said major infrastructure upgrades at state and council level meant Parramatta’s outskirts, including Merrylands, Mays Hill, Pendle Hill and Granville, Blacktown and Rouse Hill, were the standouts.

Inner city comeback on the cards

With more than 650,000 new residents expected to move to Sydney by 2034, strong population growth is fuelling long-term demand for residential property.

When interest rates move, higher priced property markets have proven to be the most responsive.

With interest rates expected fall throughout 2025, the more expensive inner suburbs or Sydney could be the first to experience increased demand and price pressure.

Post-Covid, the following graph highlights the catch-up potential of the city’s top quartile of the real estate market.

Rhiannan Jenkins, Director, Sourced Property, said Sydney’s inner suburbs have seen phenomenal price growth that has driven those wanting a home to look for alternatives but said the inner suburban areas could soon regain their lost momentum.

“Scarcity is one of the biggest drivers of property price growth and when supply is limited—such as a character-filled Newtown terrace built in the early 1900s or a large parcel of land in Marrickville above 500sqm—demand tends to increase, simply because these types of properties are no longer being replicated.

“While we can increase housing supply through apartment developments, this tends to dilute scarcity in that particular category, making the existing stock of unique or character properties even more valuable over time.

“By contrast, in the outer suburbs, the more greenfield estates that are developed, the more uniform the housing becomes and this homogeneity leads to more choice for buyers and could mean less bargaining power for sellers.”

The quest for more affordable property options has not translated into higher unit prices.

The past three months have seen the value of houses rise by 1.1 per cent across the combined capitals, more than double the 0.5 per cent lift recorded across the unit sector.

This trend is mostly being driven by Sydney, where house values were up 1.4 per cent over the rolling quarter compared with a 0.3 per cent fall in unit values over the same period.

“In my experience, areas and property types that are genuinely scarce tend to experience stronger demand,” Ms Jenkins said.

“Over the long term, inner-city suburbs are likely to see stronger price growth—driven by factors such as scarcity, desirability and limited supply.”

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The Australian Taxation Office is on the warpath and property investors need to be prepared.

Early in 2025, the Australian Taxation Office (ATO) announced a major compliance crackdown on property investors, launching an extensive data-matching program designed to identify tax non-compliance.

Over the next three years, the ATO will collect rental bond data from more than 2.2 million landlords, tenants and property managers twice annually. The program specifically targets underreported rental income, unlodged tax returns, and inaccurate deduction claims.

With this heightened scrutiny, landlords who fail to maintain accurate records or meet their tax obligations could face audits and financial penalties.

Landlords who take proactive steps to ensure their financial records are accurate and up-to-date can avoid unnecessary stress and financial losses.

Understanding the ATO’s compliance focus

The ATO’s latest compliance initiative builds on its ongoing efforts to ensure landlords are meeting their tax obligations.

With access to rental bond data, tax officials can now cross-check information reported in tax returns against actual rental transactions.

This initiative helps the ATO identify cases where rental income has been underreported, properties have not been declared, or deductions have been claimed incorrectly.

This increased oversight means landlords must take extra care when lodging their returns.

Even minor errors like failing to report rental income from a short-term lease or mistakenly claiming a repair as a capital improvement can lead to an audit and result in penalties.

Common mistakes that trigger an ATO audit

Property investors must be aware of common tax errors that could raise red flags with the ATO. These include:

• Overclaiming interest deductions

Deducting interest on personal loans rather than those directly related to the investment property.

• Incorrectly apportioning deductions

Claiming 100 per cent of deductions for a property that is only partially rented out.

• Failing to declare rental incentives or insurance payouts

Any rental incentives, including rent reductions or insurance payouts for lost rental income, must be reported.

• Claiming ineligible travel expenses

Travel deductions for rental property inspections are no longer allowed for most investors.

• Misclassifying expenses

Repairs are deductible immediately, but capital improvements must be depreciated over time. Incorrect classification can result in compliance issues.

The hidden risk for landlords

One of the most overlooked areas of tax compliance among property investors is depreciation.

According to BMT Tax Depreciation data, 66 per cent of investment properties have undergone renovations or upgrades. Yet, many landlords fail to claim their full depreciation entitlements, leaving thousands of dollars in unclaimed deductions each year.

Depreciation is one of the most valuable tax deductions available to property investors, as it allows them to offset the cost of wear and tear on their investment properties.

Calculating depreciation correctly requires specialised knowledge of tax legislation and property structures. Many landlords either miss out on deductions for renovations completed by previous owners or fail to properly document upgrades they have made themselves.

To claim depreciation accurately and maximise tax savings, landlords must engage a registered quantity surveyor who can prepare a comprehensive depreciation schedule that aligns with ATO guidelines.

This document serves as crucial evidence in the event of an audit, substantiating depreciation claims and reducing the risk of errors in tax submissions.

Key steps to remain audit-proof

With the ATO’s expanded data-matching program actively monitoring rental property compliance, landlords need to take proactive measures to protect themselves from potential audits and penalties. Here are three key steps every property investor should follow:

• Report all rental income accurately

Ensure that all rental income is declared, including income from short-term rentals like Airbnb. Be aware of special conditions that apply to non-resident landlords and ensure compliance with relevant tax legislation.

• Claim all eligible deductions

Keep detailed records, understand that repairs are immediately deductible while capital improvements are depreciated over time, and claim depreciation for both the building and eligible assets. Maintain clear records of all expenses related to the investment property.

• Engage a registered quantity surveyor for a depreciation schedule

Only specialists, like quantity surveyors, are recognised by the ATO for providing compliant depreciation schedules. A detailed schedule ensures landlords do not miss out on significant tax deductions and provides documented proof in case of an audit.

Landlords who fail to maintain accurate records or claim deductions correctly risk not only financial penalties but also the stress and time associated with an ATO audit.

The latest compliance crackdown serves as a timely reminder for investors to review their financial reporting processes and take action to protect themselves.

By implementing strong record-keeping practices, accurately reporting rental income, and securing a professionally prepared depreciation schedule, landlords can ensure they remain audit-proof while maximising the benefits of property investment.

Both sides of politics are turning their sights against foreign property buyers, but will a ban have any impact on the housing crisis?

Political posturing over the housing crisis has continued, with the Federal Labor Government undermining the Opposition’s stance on banning foreign property investors from buying established homes by adopting the same policy.

Foreign investors are already barred from buying existing homes but are allowed exceptions for some circumstances, like moving to Australia for work or study.

In 2022/23, foreign investors accounted for just 5,360 residential real estate purchases, of which only a third were existing dwellings.

The Albanese Government this week announced it will ban foreign investors from buying established homes for at least two years and crack down on foreign land banking.

Treasurer Jim Chalmers had described the same policy stance of Opposition Leader Peter Dutton as “unhinged” but has since changed his tune.

“It’s a minor change, but a meaningful one because we know that every effort helps in addressing the housing challenge we’ve inherited.

Treasurer Jim Chalmers

“We’re banning foreign purchases of established dwellings from 1 April 2025, until 31 March 2027 (and) a review will be undertaken to determine whether it should be extended beyond this point.

“The ban will mean Australians will be able to buy homes that would have otherwise been bought by foreign investors,” Mr Chalmers said.

Julie Kelley, Global Sales and Marketing Manager – SMATS Group of companies, said the changes would be ineffectual in contributing anything relevant to the housing crisis.

“This is little more than a political play of words.

“FIRB essentially restricts foreign buyers from purchasing established properties, although buyers may apply for exemptions.

“Foreign investors account for only a small margin of buyers and the new rules won’t make a scrap of difference.

“This is political nonsense on both sides of politics trying to win votes by playing the anti-foreigner card.”

“The percentage of foreign investors buying property in Australia isn’t huge and they are already paying colossal government fees in excess of the purchase price and stamp duty.”

Supporting Ms Kelley’s assertion about foreign buyers paying much higher entry costs, a local buying a $1.2 million Sydney property would pay the same $48,529 stamp duty as a foreign buyer. But the latter would also incur a whopping $96,0000 surcharge purchaser duty expense.

The ban has been branded irrelevant given the most significant proportion of foreign buying today is actually migrants becoming Australians and buying a place to live.

Ravin Chatlani, Director of Taxation, Australasian Taxation Services, said he didn’t believe it would make a big difference in the market given temporary residents can still buy brand new properties in Australia.

“My thoughts have always been that solving the supply issues and the time it takes to deliver more housing stock is more crucial than measures to restrict demand.”

In addition to the purchasing ban, Mr Chalmers added that the government was cracking down on land banking by foreign investors to free up land to build more homes more quickly.

“Foreign investors are subject to development conditions when they acquire vacant land in Australia to ensure that it is put to productive use within reasonable timeframes.

“The Government is focused on making sure these rules are complied with and identifying any investors who are acquiring vacant land, not developing it while prices rise and then selling it for a profit.”

The ATO and Treasury would be given $8.9 million over four years from 2025–26 and $1.9 million ongoing from 2029–30 to implement an audit program and enhance their compliance approach to target land banking by foreign investors.

WA political parties hacking away at stamp duty

Housing is also a hot political potato at the state level.

With an election looming on 8 March on Western Australia, the sitting Labor Government announced on Tuesday (18 February) that if elected they will raise the stamp duty exemption threshold from $450,000 to $500,000 and raise the concession threshold from $600,000 to $700,000 in Perth Metro and up to $750,000 in regional WA.

The Liberals had previously announced that if elected they will raise the stamp duty exemption thresholds from $450,000 to $550,000 and raise the concession threshold from $600,000 to $700,000.

Labor also announced they will raise the stamp duty threshold for first home buyers on land purchases from $300,000 to $350,000 and give a stamp duty discount up to $450,000.

A further $20.6 million was included in Tuesday’s announcement by Labor to expand stamp duty exemptions for new home purchased off-the-plan and under construction.

The Nationals went early with a policy to completely abolish stamp duty for first home buyers. But they did not announce any changes to exemptions on off-plan and under construction homes.

“Master Builders CEO Matthew Pollock said stamp duties are “amongst the worst taxes a government can levy on homeowners.”

“Every report on stamp duty shows it’s a bad and unfair tax that creates high economic loss, reduces labour mobility, and hits low-income households harder than high income households.

“Stamp duty is a major barrier for many families hoping to get on the property ladder and can make up as much as 20 per cent of the upfront cost of buying a new home.

“Stamp duty is a major financial handbrake on people looking to move.

“It’s a barrier to attracting talent into the state, or for people to move to communities where their skills are in high demand, including the builders and tradies we need to build more homes.”