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.”
