BMT Tax Depreciation revealed Monday the average value of Australian investment property is $751,800 based on results from the December 2021 quarter.
This lies in comparison to the mean price of residential dwellings reported by the ABS last month, with a figure of $920,100 for the same period – a difference of $168,300.
BMT looked at the average purchase price of investment properties for which it prepared more than 800,000 tax depreciation schedules in the December 2021 quarter:
BMT CEO Bradley Beer said the findings challenged the presumption that wealthy property investors are responsible for driving up property prices.
"The average property investor is simply making an investment choice based on cash flow and the potential for long-term capital gains – they are not competing at either the top or the bottom of the market," Mr Beer 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."
Read more: The Bank of ‘Mum and Dad’ Explained
Mr Beer further highlighted private Mum and Dad investors fund the majority of affordable rental housing in Australia, yet the looming rental crisis means intervention is needed.
"With a 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," he said.
Property Investments Professionals of Australia (PIPA) chair Nicola McDougall echoed this sentiment.
"A system needs to be developed to encourage the private and public sectors to work collaboratively together to increase rental supply and to improve rental affordability for tenants," Ms McDougall said.
The value of investment lending has only recently recovered after regulations clamping down on certain types of investment lending were introduced in 2014 and 2017.
According to the ABS, investment lending remains near record highs, with $10.8 billion in investment loans written in February 2022.
Investment lending recorded unbroken growth from October 2020 to January 2022.
Return of international students
ABS data released Tuesday revealed 49,340 international students arrived to Australia in February, an increase of 49,140 students from the same month a year ago.
Further, long-term overseas visitors increased 13,750 from January, while short-term overseas visitors increased 26,880 from January.
ABS classifies an overseas long-term visitor as someone staying for greater than a year while an overseas short-term visitor is someone staying for less than one year.
Foreign investor whacked with $250,000 penalty
On Monday the Australian Tax Office issued, through the Federal Court, a $250,000 penalty to a foreign investor.
It's the first of its kind in Australia under the foreign investment rules.
The ATO penalised the foreign investor for purchasing four properties in outer Melbourne while also owning two established properties - without receiving permission from the government's Foreign Investment Review Board or FIRB.
Under legislation, foreign investors are limited in the type of residential property they can acquire in Australia and must apply to the FIRB beforehand.
According to the ATO, foreign investors found to be in breach of the Foreign Acquisitions and Takeover Act 1975 (FATA) face civil penalties to enable the government to recapture capital gain or 25% of value of the property, whichever is greater.
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