How many Australians own an investment property?

By Michael Yardney | 22 Oct 2020

There is a lot of noise being bantered about regarding how much money it takes to be rich in Australia.

And there’s often fuss made about all those rich greedy property investors.

So just how many Australian households hold an investment property?

The Australian Taxation Office recently released their latest stats on property investment, so let’s see how rich property investors really are.

Here is a quick summary…

According to Corelogic:

  • There are 10.5 million dwellings in Australia with a total value of $7.1 trillion
  • There is a total of $1.85 trillion in outstanding mortgage debt.
  • 52.5% of Australian household wealth is held in housing

The Australian Taxation Office tells us that in the 2017-8 tax year (the latest statistics available)

  • There are 2,207,893 property investors in Australia
  • This means around 20% of Australian households hold an investment property and 80% don’t.
  • The top investor age groups are:
    • 27.83% are aged 60 or more
    • 31.67% are aged between 50 and 59years
    • 24.65% are aged between 40 and 49 years
    • 14.22% are aged between 30 and 39 years
    • Just 1.63% are younger than 30
  • Here’s how many properties investors hold
  • 1 investment property - 71% (1.57million) - increased by 2.3% over the last year
  • 2 investment property - 19% (418,000) - increased by 2.7% over the last year
  • 3 investment property - 6% (129,784) - increased by 3 % over the last year
  • 4 investment property - 2% (47,469) - increased by 2.2% over the last year
  • 5 investment property - 1% (19,861) - increased by 1.8% over the last year
  • 6 or more investment property - less than 1% (20,756) – increased by 2% in the last year

How much are these property investors earning?

Nothing much has changed over the years.

The fact that 90% of investors only own one or two investment properties has been the status quo for many years.

But what I find more interesting is digging into the statistics to see you how much rental income these property investors are earning.

Of the 2,207,905 property investors who filed a rental schedule

  • 40% were cash flow neutral or cash flow positive
  • Roughly 60% were in a net rental loss situation (negatively geared)

Here’s a snippet from the ATO data

No of Property Interests

Overall net rent loss

Overall net rent neutral/profit

2018

59.97%

40.03%

1 interest

60.02%

39.98%

2 interests

60.77%

39.23%

3 interests

58.80%

41.20%

4 interests

57.51%

42.49%

5 interests

56.89%

43.11%

6 or more interests

55.95%

44.05%

Source: A.T.O

Property investment may be simple, but it’s not easy, as clearly most property investors failed to build a sufficiently large property portfolio to provide them with a substantial retirement income.

However, growing a property portfolio will supplement your superannuation and other investment assets to help secure your financial future.

Of course, the number of investment properties you own is not nearly as important as the quality of your assets and amount of equity you have in them.

I’ve often said I’d prefer to own one Westfield shopping centre than 50 properties in regional Australia.

It’s also important to recognise that not all properties are “investment grade.”

Of course, any property can become an investment - just kick the owner out and put a tenant in, but that doesn’t make it “investment grade” – one that grows at wealth producing rates of return.

Another important factor to recognise is that the location of your property will do 80% of the heavy lifting.

Over the last decade some properties have grown in value 50-100% more than others and moving forward in the coming challenging decade it’s unlikely that this will change.

More affluent, liveable suburbs that have lifestyle and amenities are likely to outperform with regards to capital growth and rental growth.

And these suburbs are likely to be in the inner and middle ring suburbs of our capital cities.

So don’t be disheartened by the fact that most property investors never get past the first investment property.

Instead take heart from the fact that if you invest strategically you can join that group of investors who builds themselves a level of financial independence by growing a multi-million-dollar property portfolio.

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Michael Yardney is CEO of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog.


To read more articles by Michael Yardney, click here

Top Suburbs : homebush , gladesville , werribee , sunshine , spearwood

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