Investment property ownership – The facts, not the noise

There is a lot of noise being bantered about regarding property investment of late.

No surprises here given the recent federal election result, the tightness of the countries rental market and changes to property investment taxation potentially coming our way, thanks to the Labor Party, Greens and a weak opposition.

I don’t want to join the noise, but when I read or hear gibberish I always like to go back to the numbers.

So just how many Australian households hold an investment property? And who are these cats?

A quick summary

• There are about 9.7 million dwellings in Australia
• Of which some 2.0 million are held by investors
• So, 22% of Australian households hold an investment property and 78% don’t

More detail

Ownership by household income group:

• 15% are in the lowest 20%
• 12% are in the second quintile (i.e. between 20% and 40%)
• 16% are in the third quintile (40% to 60%)
• 23% or about a quarter are in the fourth quintile (60% to 80%)
• 36% or just over a third are in the highest 20%

The top investor age groups are:

• 25% are aged between 55 and 64 years
• 23% are aged between 45 and 54 years
• 22% are aged between 35 and 44 years
• And just 13% are aged under 34 years

When it comes to the investment property’s value (in today’s dollars), investor’s think that:

• 28% are worth between $250,000 and $500,000
• 15% are worth less than $250,000
• 24% are worth between $500,000 and $750,000
• And 8% think their investment property is worth over $2 million.

How many investment properties do investor households hold?

• 68% hold one investment property
• 20% hold two investment properties
• 8% hold three investment properties
• And just 4% hold four or more investment properties

To add the numbers to this spread:

• 1,363,000 investor households hold one investment property
• 411,000 hold two investment properties
• 155,000 hold three investment properties
• And just 87,000 investors hold four or more investment properties

Interestingly

Some 580,000 or 41% of these investment properties are not rented out.

Whereas there are 7.7 million homes held by owner residents or rented by tenants.

These owners and tenants do not own an investment property.

Yet about 580,000 or 8% of these people rent out a room or rooms in their homes.

This owner resident and renter leasing breakdown by tenure is:

• 180,000 or 8% are owners
• 205,000 or 8% have a mortgage
• 173,000 or 7% are renters

Maybe we do need an housing vacancy tax?

Or at least a hard look at ways we can get investors to rent out their homes.

An additional 580,000 homes to the current rental pool would have a big impact.

Anyway the best way to understand what is going on is to go back to the actual numbers.

About Michael Matusik Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive