Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Wealthy investors not driving property prices
Surging home property prices, that have moved property to unaffordable levels partly due to decades of falling interest rates, are often blamed on the wealthy property investors who drive prices higher. But this myth has now been busted.
According to BMT Tax Depreciation, Australia’s leading supplier of tax depreciation schedules, investors are not the driving force behind property price rises. Data analysed by the firm of more than 800,000 investment property schedules found that the average property price in the December quarter 2021 was $751,800.
The Australia Bureau of Statistics (ABS) says it is $920,100 for the December 2021 quarter.
The value is well below the reported ABS figure, which challenges the view that wealthy property investors are responsible for price rises. Bradley Beer, chief executive officer of BMT, said “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. They are typical Aussies using investment properties to boost their retirement nest eggs.”
The common theory is that generous tax depreciation incentives is the driving force behind investors purchasing investment properties. But this theory was dismissed after recent ATO data showed that 74% of investment property owners earn less than $100,000.
The theory that most property investors are affluent and wealthy is nonsense.
Beer concludes by saying, “Private Mum and Dad investors fund the majority of affordable rental housing in Australia. 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.”
