When most Aussies think of property investors, they conjure images of wealthy, full-time speculators dressed in flashy suits and driving sports cars. However, research conducted by Maria Yanotti, lecturer of economics and finance at the Tasmanian School of Business and Economics, reveals a very different picture.
In reality, Australia’s residential investment market is dominated by people who’ve bought their own homes and have since moved on to property investment. These small-scale investors own 83% of all investment properties.
“Private data …used in my research (for the period 2003-09) reveals what the typical real estate investor looks like. They are on average 42 years old, 72 per cent are married, and fewer than two-thirds of investors get finance with a co-borrower. Only a third of investors are female,” Yanotti said.
“A typical rental housing investor is a high-income earner or family partnership, owning one or two dwellings as an extra income source. The probability of becoming a residential investor tends to increase with age and homeowner status, but declines after the age of 65,” she added.
How about the stereotype of conspicuous wealth? Are property investors as rich as the media sometimes makes them appear?
According to Yanotti, residential investors have an average net monthly income of $8,600, or $103,200 annually. “But if we exclude the 100 investors with a net monthly income over $100,000, the average net monthly income becomes $6,617, or $79,404 a year.”
“The data also show that direct residential investors are mainly professionals, in management positions, small business-owners, or workers with a skilled trade,” Yanotti said. “Overall, 27 per cent are self-employed, relative to the 19 per cent of self-employed owner-occupiers.”
Yanotti derived her analysis from data from the Australian Bureau of Statistics (ABS), as well as private data from a major mortgage provider.
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