Small investors, aspirational mums and dads, provide much of the available rental housing. They are poorly organised and when they speak, are treated as individuals. Owners typically rely on REAs or 'someone' to represent their interests, but REAs and 'others' have their own interests and agenda.
Ultimately the market will react where the industry is not viable or worthwhile for investors. It is not usual for instance for investors in anything to defer their gains - reasonable gains for risks taken - for decades while hoping for a windfall from the sale of the entire investment one day. -Selling the farm to make a profit that is of course also subject to tax.
It is distrust of other investments that props up an industry that could only be regarded as viable for the very astute and disciplined few. Rental property is not 'sit back and make a profit' and from the many posts on the subject, the sort of professional property management that facilitates problem-free, worry-free investment is a scarce commodity.
Regarding risk, how often does one read advice on the forum for owners to just shrug their shoulders and walk away?
Risks from complexity and regulatory risks? Not so few, apparently.
Inevitably the market will work it all out. However that could be by large lurches if investor confidence is challenged. Because investment in rental housing might often depend more on emotion and tradition than proper risk analysis and crunching the numbers.
I believe that one day a lot of the 'investment' housing will be owned by larger institutional investors and that will come about by the wholesale loss of confidence of smaller investors. It wouldn't take much to start the run and successive governments seem to be creating the conditions for it, as well as overseas influences, never discount those. Once lost, those smaller investors will not return. One could draw parallels with the loss of family farms and turnover of small businesses.