More than 10 per cent of households own an investment residential property, according to a Reserve Bank assessment made public yesterday (May 20).
It said the Household, Income and Labour Dynamics in Australia (HILDA) survey compiled by the Melbourne Institute of Applied Economic and Social Research, provided the first comprehensive data set on the demographics, debt and assets of residential property investors in Australia.
Property investors were households that reported owning a residential property that was not their primary residence and reported receiving rental income. According to this definition, 10.3 per cent of all households owned investment properties.
A further 6.5 per cent of households reported owning a residential property that was not their primary residence but did not report receiving rental income. While most of these might represent holiday homes or instances where a family member or friend was occupying the property and not paying rent, some proportion presumably represents cases where an investment property was vacant and not yielding income.
Overall, these figures confirm the general view that investment property ownership in Australia is widespread, and is considerably higher than that in other countries, such as the US, Canada or the United Kingdom.
Investor households tended to be somewhat older than the rest of the population, had higher incomes, more likely to be working, and wealthier.
Only 85 per cent of investor households owned their own home. The other 15 per cent rented, but owned a residential property which they did not normally reside in. This group tended to be younger than those investors who also owned their own home: the median age of renter investors was 39 years, versus 49 years for owner-occupier investors.
The median value of investment property assets reported was $250 000. 55 per cent of those households owning an investment property also had debt on that property. The median size of an investor property loan ($120 000) was larger than that of a typical owner-occupier home loan ($90 000). In fact, the median gearing (the debt-to-asset ratio) on investment properties on which debt was outstanding was, at 52 per cent, markedly higher than the 40 per cent for owneroccupied homes with debt outstanding.
The median size of investor loans increased with income, but so did the value of investor properties. As a result, the gearing of investor properties did not change much across income quintiles.
Young investor households were much more likely to gear their investment properties than older investors. Young investors were also more likely than older investors to report receiving a negative net income on their property investment: indeed nearly 50 per cent of investors in the 25–44 year age group reported negative or zero net income from letting their property.
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