The Truth about Australian Property Investors
What typical Australian property investors look like might surprise you.
Statistics show that the vast majority of Australian investors are actually small-scale investors who own 83% of Australia’s residential investment market. The mental image we have of a full-time property speculator or property mogul just isn’t accurate. The average Australian investor is actually rather average.
The average Aussie real estate investor is male, with 66% of investors being men. They are in their early forties, and three-quarters of them are married. Over 25% of them are self-employed, compared to owner-occupiers at 19%.
And now the big question: what about their income? You have to be rich to be an investor, right?
If we exclude the top 100 ultra-wealthy investors (their >$1,000,000 per year income drastically skews the averages, despite them being a tiny minority), the net annual income of the average investor is just short of $80,000. Definitely above-average for an individual investor, but considering that many couples invest together and can combine their income, that figure is less daunting.
What Motivates Australian Property Investors?
The motivations behind investing are just as diverse as the investors themselves. The primary reason is straightforward: income and wealth accumulation. They see property as an investment that is both long-term and secure. Over the last twenty years, property investment has consistently provided high returns with little risk.
Others invest in property because the Australian Taxation system motivates investing for taxation benefits. Capital Gains tax deductions and negative gearing benefits can make it possible to reduce the ongoing costs of owning a property to spare change. Current legislation allows property losses arising from negative gearing to be claimed against other types of income with few limits or restrictions. Depreciation on an investment property can also be claimed based on effective life. And the owable tax on an investment property is reduced by 50% if it is held for at least one year.
Some Australian property investors are investors as a side-effect. They either upgraded or downgraded their home, and simply kept the old property as in investment. Or they purchased a holiday home, and rent it out in the off-season. This behaviour is more common among older homeowners.
Data from the Australian Bureau of Statistics reveals that 35% of all housing finance is related to residential investment. While there are ultra-wealthy property speculators active in the market, the typical property investor, in reality, is actually quite average.