Property investors overwhelm market

Everyone knows there’s a property boom in Sydney and Melbourne, but what may have escaped people’s attention is how it’s changing the face of Australian investment in a very dangerous way.

Numbers that have been coming out of a parliamentary inquiry into the housing market chaired by former tennis champ and now Coalition MP John Alexander, have identified this major change in the property market.

The data has been coming out in dribs and drabs but when you put it all together as the AFR did this week, the nation has never seen anything like this before and reinforces why the banks have been told to restrict their lending to property investors.

In fact on Thursday the Reserve Bank of Australia was suggesting that the rules governing the taxation of property should be reviewed . . . and that included negative gearing.

Mr Alexander warned that low interest rates had created a growing class of uber-landlords with huge property portfolios who risk big losses if the market turns or rates rise.

So what was he talking about? Here are numbers provided by the Housing Industry Association: In the year to May 2015, the value of investor lending in NSW alone totalled $65.8 billion. That compared with $44.93 billion in lending to owner-occupiers (excluding refinancing) over the same period.

Overall the value of owner-occupier home loans was $144.1 billion, compared with $146.9 billion for investor loans, the first time investors have out-borrowed owner-occupiers.

It’s easy to understand why everyone is getting worried; the AFR did a little digging of its own and came up with these figures: Nearly 10 per cent of rental property investors own three or more properties, and nearly 18,000 own six or more, the latest tax statistics from 2013 reveal, and the number is rising.

Overall 16 per cent of taxpayers, or nearly two million people, own investment properties; about 110,379 taxpayers own more than three properties; about 18,000 own more than six properties; 40,283 own four properties; and 16,600 owned five.

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