Amidst the current economic landscape characterised by soaring inflation and escalating property prices, the spotlight often falls on property investors. The prevailing narrative tends to paint these investors as ‘greedy,’ allegedly hoarding affordable properties and leaving little for others.
To demystify this perception, let’s delve into the latest statistics provided by the Australian Taxation Office (ATO) and understand the dynamics of property investment in Australia.
The fundamental premise that the number of properties one can own in Australia is limitless opens up a realm of possibilities. Despite the common stumbling blocks faced by many at their initial foray into property investment Australia, we see this as an opportunity. We recognize that with the right strategy, even those starting with limited resources can build a property portfolio that stands the test of time.
The Numbers of Australian Property Investors:
Based on information from ABS and CoreLogic –
- Australia has 10.9 million residential properties.
- By May 2023, the residential market’s total value had grown to $9.6 trillion.
- According to the ATO’s most recent data, 2,245,539 people, or around 20% of all taxpayers in Australia, owned an investment property during the 2020–21 fiscal year. Altogether, 3.25 million investment properties are owned by this group.
Breaking down the numbers of investment property ownership:
- 71.48% of investors own 1 property.
- 18.86% own 2 properties.
- 5.81% own 3 properties.
- 0.89% (19,920 investors) own 6 or more properties.
Scope and Value:
But what does these numbers imply?
The data implies a robust and dynamic Australian property market, marked by the extensive presence of 10.9 million residential dwellings. This vast canvas allows property investors, comprising around 20% of taxpayers (2,245,539 individuals), to strategically build portfolios. The market’s financial significance is evident in its $9.6 trillion total value and $2.2 trillion outstanding mortgage debt, actively shaped by millions of Australians. With 56% of household wealth held in housing, property plays a pivotal role in wealth distribution. The breakdown of property ownership reveals a prevalent single-property ownership (71.48%), a segment diversifying with two properties (18.86%), and a notable 0.89% (19,920 investors) owning six or more properties, signifying sophisticated scaling.
The breakdown of property ownership by investors reveals interesting shifts. We have noted the transition from older Australians dominating property holdings to the current era where ‘working age’ Australians take the lead. This shift aligns with our focus on catering to a diverse demographic, recognizing the evolving landscape of Australian property investors.
Trends and Challenges in Property Investment:
The data unveils a decade-long trend of decreasing new investors entering the market. This decline, as highlighted by us, is attributed to multifaceted challenges – from changes in lending policies to political uncertainties. As a newcomer in the industry, we acknowledge these challenges and position ourselves as a guide to navigate the complexities for its clients.
Negatively Geared Investors:
The revelation that 54% of property investors reported being negatively geared in 2019-20, resulting in a collective net rental loss of $166.5 million, reflects the diverse landscape of property returns. We recognize the need for strategic approaches to counteract market fluctuations and optimise returns.
AD Property Investment Advisors’ Unique Position:
AD Property Investment Advisors’ 6-Stranded Strategic Approach is positioned as a guiding principle for clients. Emphasising the importance of timing, location, property selection, and value, this approach is designed to mitigate risks and enhance the chances of long-term success, especially for clients who may be navigating the property investment Australia landscape for the first time.
- Timing – We identify prime stages in economic and property cycles, guiding clients to enter the market when conditions favour capital growth. Know more by Understand the 3 Stages of Property Investing.
- Location – We meticulously select states and suburbs based on historical growth trends, economic indicators, and demographic shifts for sustained investment success.
- Property Selection – We opt for standout properties, appealing to owner-occupiers and enhancing local real estate values for long-term client success.
- Value – We secures properties below intrinsic value, steering clear of premium-priced new developments, providing a buffer against market fluctuations.
- Location within Location – We focus on micro-dynamics, selecting streets and areas within suburbs with higher desirability and growth potential for superior returns.
- Value Addition – We actively seeks properties with potential for improvement, embracing refurbishment, renovations, or redevelopment to manufacture growth and enhance portfolio performance.
In essence, AD Property Investment Advisors’ 6-Stranded Strategic Approach is a dynamic strategy crafted to mitigate risks and enhance the likelihood of long-term success. Especially beneficial for those navigating the property investment Australia landscape for the first time, this approach empowers clients to make informed decisions, strategically positioning themselves for prosperity in the ever-evolving property market.
AD Property Investment Advisors – Your Guide in the Property Investment Journey:
In a landscape where property investment in Australia is both a challenge and an opportunity, AD Property Investment Advisors stands as a guide. Whether you’re a beginner or an experienced investor, we take a holistic approach to your financial growth. Trust us to provide you with direction, guidance, and results, securing your financial future through strategic property advice, buyer’s agency, wealth advisory, and property management.
Property investment Australia, your investment property, Australian property investors – these are not just keywords; they embody our commitment to your success. Let us be your partner on this journey, decoding the complexities of the Australian property investment market for you.