Are property investors pushing prices higher?
The average price for investment properties was found to be nearly $170,000 below the mean national property price.
New analysis from BMT Tax Depreciation has indicated that the average value of investment properties in Australia is significantly lower than the average value of properties overall.
Based on tax depreciation schedules prepared by the firm during the December quarter, BMT found that the average purchase price of investment properties was $751,800.
In comparison, the Australian Bureau of Statistics (ABS) reported last month that the mean national property price was $920,100 during the same period.
“We know from both our own data, and data from the ATO, that property investors are mostly ‘Mum and Dad’ type investors with one investment property,” said BMT CEO Bradley Beer.
“They are typical Aussies using investment properties to boost their retirement nest eggs.”
Mr Beer said that the firm’s findings challenged the view that wealthy property investors were responsible for driving up property prices and that tax incentives associated with property investment had encouraged investors to enter the market to compete with owner occupiers.
“The average property investor is simply making an investment choice based on cash flow and the potential for long-term capital gain. They are not competing at either the top or the bottom of the market,” he argued.
Additionally, Mr Beer noted that even though property investors are often viewed as being wealthy high-income earners, 74 per cent of those who own investment properties earn less than $100,000 per year, according to data from the ATO.
“Private Mum and Dad investors fund the majority of affordable rental housing in Australia,” he said.
“With a looming rental crisis in many regions and a shortage of affordable housing and rentals, government should concentrate on increasing supply of housing and be careful of making changes to negative gearing and other incentives available to property investors.”
The ABS recently reported that the value of investor loan commitments fell 1.8 per cent to $10.8 billion in February, the first fall since October 2020.
Lower investor loan commitments were recorded in the ACT (-11.9 per cent), NSW (-5.5 per cent), South Australia (-4.8 per cent) and Queensland (-2.6) during the month.
Meanwhile, the value of investor loan commitments remained flat in Victoria and rose in Western Australia (6.8 per cent) and Tasmania (2.8 per cent).