The latest figures produced by Core Logic shows that Victoria is the king of the property investment market in Australia. Their figures show that investor ownership is highest in Victoria, where CoreLogic estimates 30.5% of all dwellings are investment owned.
Other States which have a high proportion of investor activity include Queensland and New South Wales where 28.5% and 26.3% of all dwellings investment owned. However, States with smaller populations tend to have lower levels of investor ownership with investor owned dwellings comprising 17% of Tasmanian dwellings, 23.2% of Western Australian dwellings and 23.5% of South Australian dwellings.
These figures indicate that in property markets where investors are more active such as Victoria and New South Wales tend to benefit the most when investor activity is strong. This is particularly been the case during the past three years when strong investor activity has seen a surge in property values in both Sydney and Melbourne.
However, when the investor market begins to subside nationally, its greatest impact will be felt in these areas where the property market is underpinned to a high degree by investors. Melbourne and Sydney now have the lowest rental yields in Australia and this may have an adverse impact on investor activity on these two capital city markets moving forward.
CoreLogic estimates there are 2.6 million investor owned dwellings across Australia worth approximately $1.37 trillion. Based on the most recent taxation data, there are 2.03 million individuals who indicated they owned a residential rental property, implying a very low concentration of investment (approximately 1.28 investment properties per investor).
Nationally, investor owned dwellings comprise 26.9% of all housing stock, but 23.8% of the value of all housing stock, highlighting that investment in the housing market is generally across lower valuation segments compared with owner occupied homes. Over the past two years, investor owned dwellings have increased from 22.3% of all housing stock nationally to 26.9% in April 2016.
Across the broad product categories of houses versus units, investment is heavily concentrated within the unit sector, where investor owners comprise almost half (48%) of all attached housing. Conversely, detached housing ownership is more biased towards owner occupiers, with investors accounting for 17% of all detached housing stock.
Note that CoreLogic estimates of investment levels exclude those dwellings which are government owned and those that aren’t available for rent.