Investors own half of all Australian apartments

As the future of negative gearing hangs in the balance, a new report has found that almost half of Australian units are owned by investors.

CoreLogic this week released its national Profile of the Australian Residential Property Investor report which found that almost half (48 per cent) of Australia’s unit stock is owned by investors, while investment ownership of detached housing comprises of 17 per cent.

Darwin topped the list, with 30.3 per cent of houses and 63.1 per cent of units owned by investors.

Queensland’s Gold Coast came in second, with 24.7 cent dwellings and 41 per cent of units owned by investors.

Melbourne (19.7 and 57.8 per cent), Sydney (15.4 and 49.6) and Brisbane (21.7 and 51.5) took the third, fourth and fifth spots respectively.

The Northern Territory – Bal region followed, with 18.5 and 54.5 per cent of houses and units respectively owned by investors.

Rounding out the top 10 were Queensland’s Mackay (23.0 and 29.8), Far North (16.0 and 56.4), Northern (20.9 and 59.1) and Fitzroy (22.9 and 47.7) regions.

Adelaide (17.6 and 59.9) and Canberra (13.4 and 42.5) made the top 20, ranking 13th and 15th respectively.

Hobart was the only capital city missing from the top 20, placing 31 nationally.

According to the report, investment concentrations tend to be highest within the capital cities, particularly Melbourne. However, large concentrations of investor-owned dwellings could also be found in mining regions and coastal markets associated with tourism and lifestyle factors.

On a national level, investment was generally skewed towards the lower valuation brackets, with 53.4 per cent of investment-owned dwellings recording a current estimated market value of less than $500,000, compared to 46.9 per cent of owner-occupied dwellings.

“While investors have generally derived strong capital gains from their properties over recent years, growth in rental income has been comparatively soft. Investment is currently ensuring that there is ample rental accommodation and subsequently easing rental price pressures,” CoreLogic’s Asia-Pacific research director Tim Lawless said.

“Across the combined capital cities, weekly rents were 0.2 per cent lower over the 12 months to April 2016, whilst gross rental yields have been on a downwards trajectory since mid-2013, when growth in dwelling values started to outpace growth in rental rates.”

“Currently, it’s lower mortgage rates that are offsetting the burden of low rental yields, however, the spread between the average standard variable mortgage rate and gross rental yields has been pushing slightly higher since September last year.”

According to Mr Lawless, when mortgage rates do eventually start to rise, investors will face higher holding costs.

“This is likely to result in a renewed focus on recovering these higher costs via rental increases.

“However, if residential property investors are unable to implement higher rents, we can expect to see an increase in net rental losses.”

[Related: Auswide cuts rates for investors]

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Georgia Brown

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