Let’s recall Australia’s real estate treasurer, Scott Morrison’s, speech to the Australian Housing and Urban Research Institute in April, whereby he argued that negative gearing was being used primarily by ordinary “mum and dad” investors like teachers, and to restrict negative gearing would hurt lower income earners:
Figures to be released later this week show 2 million taxpayers in Australia have an interest in a residential investment property. 72 per cent own just one property and 90 per cent own no more than two. 1.3 million of these taxpayers negatively gear their investments, including 58,000 teachers and one in five police officers. Two thirds of those taxpayers who negatively gear their investments have a taxable income of $80,000 or less.
They are mums and dads…
If mum and dad investors were not part of our private rental market, there would be fewer rental properties available, meaning higher rents, further crowding out of those on lower incomes and even greater pressure on already overstressed community and social housing resources.
Today, the ABS has released its Housing Occupancy and Costs, 2015-16, which reveals that it is not ordinary “mums and dads” that are primarily engaged in negative gearing, but rather higher income earners [my emphasis]:
Many Australians own a residential property other than the one they currently reside in. In 2015–16 there were 1.78 million households that owned residential property other than their usual residence. Such properties include those that are being rented out as residential investment properties and those used for other purposes, such as holiday homes.
Most households (72%) who owned other residential property owned a single property. Around one in twenty households (5%) who owned other property owned four or more properties.
Owner occupiers were more likely to own additional residential property, with around 1.39 million owner households owning other residential property. This compares to 342,000 households who own other residential property but are renting their usual residence.
Almost four in ten households who owned another residential property, excluding their current dwelling (38%) belonged to the highest quintile of equivalised disposable household income, while just over one in 10 of those households (11%) were in the lowest quintile of equivalised disposable household income.
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According to the ABS, the top 40% of households accounted for 61.8% of all housing investors in 2015-16, comprising 38.4% in the highest income quintile and 23.4% in the fourth income quintile.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
