Only 1% of Australian taxpayers own nearly a quarter of all property investments across the country, amid concerns over escalating rates of wealth concentration.
Data provided by the Australian Taxation Office has revealed the extent of that concentration, with more than 7% of property investors – or 215,321 people – accounting for 25% of all property investments.
That 7% also have three or more interests in investment properties across the country, with 1% of investors – or just 19,895 people – currently holding six or more investment interests.
It showed that while just fewer than half of property investors held one interest in an investment property, only 15% of the total number of taxpayers in Australia were property investors.
Just more than 30% of the country’s roughly 11m private residential dwellings are considered property investments.
The figures also revealed that a clear majority of that 1% were over the age of 50, contrasting with recent data from the Australian Institute of Health and Welfare, which showed that more than 60% of renters are under 35.
The data shows just how concentrated home ownership currently is, and that it is much easier to increase investment portfolios than enter the housing market.
It also comes amid a worsening housing crisis nationally, with vacancy rates at historic lows and rental affordability at its worst level in nearly a decade.
Dr Laurence Troy, a senior lecturer in urbanism at the University of Sydney, said that while the findings were unsurprising, they revealed the extent of the barriers to home ownership for people from middle or low-income backgrounds.
“The role of individual investors in the property market here really has, over time, squeezed out people who are not in home ownership,” he said.
“The sheer volume of capital coming in from investor sources is what is putting price pressures on the housing markets and so outcompeting those that don’t have home ownership.”
Troy said investors were the “biggest driving force” and the largest beneficiaries of rising prices, while making it harder for those who do not have access to generational wealth to enter the market.
“We are increasingly seeing this kind of polarisation, particularly in the big cities where those price pressures are more intense,” he said.
“In places like Sydney, you basically need to have family support to enter into homeownership. You can’t independently rent, save for a deposit and find your way into homeownership.
“We increasingly have a homeownership system that is based on the family you’re born into,” he added.
Greg Jericho, the policy director at the Centre for Future Work, said the figures highlighted how negative gearing and the capital gains discount “distort” the housing market.
“Australia is one of only three OECD countries with this type of negative gearing regime,” he said.
“Negative gearing of properties is costing Australian taxpayers nearly $4bn a year in tax revenue and makes it much harder for first-home buyers to enter the market. Overwhelmingly, the majority of the benefits of negative gearing go to the richest in Australia.”
Jericho added that capital gains tax should be scrapped, while negative gearing policies should be reformed.
“Limiting negative gearing to new properties to ensure it promotes an increase of housing supply rather than increasing the wealth of Australia’s richest would be a good start.”
Prof Hal Pawson, from the City Futures Research Centre at UNSW, said the findings were “pretty dramatic”. His own research had indicated an increase in the number of property investors since 2001.
He said that the reason wasn’t down to the financial benefits of rental income, but because housing was seen as a surefire return on investment.
“The most important motivation for most individual landlord investors is expectation that the value of the asset will be a lot more in 10 years than it is now.
“And yes, you do pay capital gains tax on that, but only at a discounted rate. And it’s still been highly attractive to do that over the last decades.”
Pawson said the “professionalisation” of the investor industry has made landlords more “business savvy” in the past two decades and made investing easier and more effective at generating wealth.
“There’s a huge industry which functions to advise people investing in rental property, and how to do so to their best advantage,” he said. “And that industry is tending to lead to more and more people becoming landlords, in some cases probably without even ever seeing the property.”
The Tenants’ Union of NSW chief executive, Leo Patterson Ross, said the numbers reflected just how large some investment portfolios can get.
Ross added that a key issue was the fact housing was seen as a “wealth-generating investment” and not a social necessity.
“Taxation, banking practices and light regulation has turned property into primarily a wealth generating investment strategy rather than recognising the use of home as the primary purpose of the renting sector.
“This comes at a cost both to renters and hopeful owner occupiers who face higher and higher prices.”
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FAQs
A quarter of Australia's property investments held by 1% of taxpayers. Tax office figures also show a clear majority of those investors are over the age of 50. The data shows just how concentrated home ownership currently is, and that it is much easier to increase investment portfolios than enter the housing market.
What does a quarter of Australia's property investments held by 1% of taxpayers data reveal? ›
A quarter of Australia's property investments held by 1% of taxpayers, data reveals. Only 1% of Australian taxpayers own nearly a quarter of all property investments across the country, amid concerns over escalating rates of wealth concentration.
What percentage of Australia is investment properties? ›
The latest data from the Australian Taxation Office (ATO) reveals that 2,245,539 Australians or around 20% of Australia's 11.4 million taxpayers owned an investment property in 2020-21 – this is the latest data available at the time of writing and was released in June 2023.
What percentage of Australian homes are owned by foreign investors? ›
Foreign investors bought less than 1 per cent of residential property in Australia in 2020-21, according to official figures, helping the Albanese government push back on calls for it to start “buying back the farm”.
How many houses are negatively geared in Australia? ›
According to the Australian Taxation Office, about 2.25 million individual tax payers (21% of all individual tax payers) claimed deductions against rental income for a total 3.25 million properties in 2020-21 financial year. Of these, 47% negatively geared their properties, claiming a net rental loss.
What is an Australian 1% entity? ›
"Australian 1% entity" , in relation to a company or trust, means an Australian entity whose associate - inclusive control interest in the company or trust is at least 1%. "Australian entity" has the meaning given by section 336. "Australian partnership" has the meaning given by section 337.
What is the tax benefit on investment property in Australia? ›
If you claim a deduction for capital works or depreciation in any income year, you can't use these in your cost base. If you own the property for more than 12 months, and you are an Australian resident, you may be entitled to a 50% discount of the capital gains tax.
How much of Australia's wealth is in property? ›
Residential real estate underpins Australia's wealth
56.6% of total Aussie household wealth is held in residential property - one of the many reasons neither the banks, the government nor the RBA wants a property crash.
What percentage of Australians invest? ›
51 per cent of Australians (10.2 million people) hold investments in addition to their home and their super fund. This is a rise of 13 per cent (or 1.2 million investors) since the last survey in 2020. 58% of investors hold Australian shares and 20% hold ETFs.
What is Australia's total property value? ›
The preliminary estimate of the total value of residential dwellings in Australia in the December quarter 2023 was $10,397.1 billion, up $196.8 billion from $10,200.3 billion in the September quarter 2023. Of the total value of residential dwellings, $9,988.4 billion was owned by households.
Key statistics
66% of Australian households owned their own home with or without a mortgage. 31% of households rented their home. Average weekly housing costs were: $493 for owners with a mortgage; $54 for owners without a mortgage; and $379 for renters.
Which country owns the most assets in Australia? ›
In the year 2020, the United States was the leading economic investor in Australia, with investments amounting to around 930 billion Australian dollars. The second leading economic investor in Australia was United Kingdom.
Who are the biggest foreign property investors in Australia? ›
The Quarterly Report on Foreign Investment (1 July to 30 September 2023) released by the Foreign Investment Review Board (FIRB) has revealed China has the largest source of approved residential real estate.
Who owns the most investment properties in Australia? ›
Out on top, with 43% of 4,159 workers, surgeons are the most prolific property investors. Second and third on the property investment list are anaesthetists and internal medicine specialists, with around 40% having declared rental income from property investment in 2019-20.
Is Australia the only country with negative gearing? ›
Negative gearing (where rental losses can be used to reduce tax on other forms of income) is not unique to Australia. Germany, Japan, Canada and Norway all have very similar systems to ours.
Why are houses so unaffordable in Australia? ›
Australian House Prices are driven over the long term by:
Australia's unusually high population growth and increasing urban concentration have a large effect on house prices. The scarcity of well-located residential land means many homebuyers are missing out on the benefits of city living.
What is the taxation data in Australia? ›
All Australia total taxation revenue continued to grow, reaching $755.8b in 2022-23 (up 10.6%), while taxation revenue as a percentage of GDP was 29.5%. Positive annual growth was recorded for all levels of government.
Does Australia record largest drop in house and unit values within one year CoreLogic data shows? ›
Australia records largest drop in house and unit values within one year, CoreLogic data shows. Australia has recorded its largest decline in property values on record, with values dropping by 7.9 per cent in a year and the median value of dwellings in more than 200 suburbs dipping below $1 million.
What percentage of wealth is in property in Australia? ›
56.6% of total Aussie household wealth is held in residential property - one of the many reasons neither the banks, the government nor the RBA wants a property crash.
What is the investment level in Australia? ›
Level of investment, by components, 31 December 2022
| Foreign Investment in Australia ($b) | Australian Investment Abroad ($b) |
|---|
| Direct Investment | 1,118.9 | 975.5 |
| Portfolio Investment - equity | 834.3 | 1,090.8 |
| Portfolio Investment - debt | 1,344.3 | 398.3 |
| Financial Derivatives | 630.3 | 599.6 |
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