The most recent taxation statistics reveal Australia has become a country of property investors, with one in seven now owning at least own investment property, aside from the family home, and more are set to enter the market during the rest of the year.
The statistics also reveal the Sydney suburbs of Edgecliff, Darling Point and Point Piper are among the nation’s richest, with an average income of $186,000 per year.
The figures show that one in seven taxpayers now own at least one investment property, about 1.7 million taxpayers, and claimed $33 billion in tax deductions over the 2007-08 year. Negatively geared property resulted in losses of over $8.6 billion, representing an increase of 35%.
More than 25%, or about 456,000, of those investors now own more than one investment property, representing an increase of 7%, and just under 75% of those are claiming a loss on investments.
Investors in Queensland and New South Wales accounted for 60% of the $8.6 billion in losses.
Australian Property Monitors economist Matthew Bell says the figures demonstrates how popular the property investment market has become, and indicates this year will continue to see increases in activity despite a small drop off during the financial crisis.
“These figures certainly don’t surprise me, they come on the back of very strong rental growth in all the major capitals before the GFC hit, and while it’s been a little flat since then, the activity has still remained very well.”
“Rents outpriced prices during that year and that certainly hasn’t happened in the last year. IT doesn’t surprise me that more people were incentivised to go back into the market.”
Bell also says the figures indicate how property will continue to perform over the next year, saying the industry has remained strong throughout the financial crisis as a less-risky venture.
“This is really an indicator of how well the property market was doing at the time, and I would be extremely surprised if those numbers came off too much during the GFC. It was a less-risky venture, and while some people had to sell off properties to pay off debt the industry itself was pretty strong.”
“So for this year, I think we’ve moved through that period of flat rental growth, and I think we’ll see some good returns this year, and they will be particularly strong compared to last year. More people will be incentivised to be in the market this year than last.”
Meanwhile, the tax figures show the New South Wales postcode of 2027, which includes the suburbs of Darling Point, Point Piper and Edgecliff, has managed to claim the title of Australia’s richest with a mean taxable income of $186,202.
Melbourne’s Toorak claimed second place with an average of $165,714. Also in Melbourne, Portsea, which claimed the top spot for three years, had its average income fall 27% to $160,592, putting it in third. But it managed to record the second highest net capital gains rate with an average net gain of $142,000.
The Sydney suburb of Mosman recorded the highest net capital gains of 2008, returning $145,660. It also managed to reach fourth in the list of richest suburbs, with a mean income of $156,063.
The full list:
1. Darling Point 2027 – $186,202
2. Toorak 3142 – $165,714
3. Portsea 3944 – $160,592
4. Mosman 2088 – $156,063
5. Dover Heights 2020 – $146,996
6. Bellevue Hill 2023 – $142,858
7. Northbridge 2063 – $141,645
8. Woollahra 2025 – $139,573
9. Cottesloe 6011 – $130,057
10. Hunters Hill 2110 – $127,141
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
