A wealthy, full-time property speculator is not what a typical investor in Australia’s real estate market. In fact, the market is made up mostly of people who don’t rely on their investment property as a main source of income. Figures show that these small-time investors own 83% of investment properties.
The typical property investor
According to past studies, real estate investors are likely to be married, wealthy males with high income and a full-time employee.
Private data from a large mortgage provider during the 2003-2009 period shows that the typical property investor is on average 42 years old, 72% are married, only one-third are female, and less than two-thirds obtain finance with a co-borrower.
Residential investors earn an average net monthly income of $8,600, or $103,200 a year. Excluding the 100 investors with a net monthly income over $100,000, the average net monthly income becomes $6,617, or $79,404 a year.
The net wealth of residential investors that are bankrolling the property with a mortgage averaged $934,091 (half of the respondents owned $581,541 in net wealth).
Direct residential investors are made up primarily of professionals, in management roles, small business owners, or workers with a skilled trade. In total, 27% are self-employed, compared with 19% of self-employed owner-occupiers.
Where do they invest?
Direct residential investors primarily put in their money on existing houses, same with owner-occupiers when purchasing a property. Only a small percentage invests in constructing new houses.
Residential investors are more likely than owner-occupiers to invest interstate or in a different post code. Additionally, a significant percentage of residential investors choose to invest in rural or regional areas. Many residential investors elect to purchase in major metropolitan cities like Melbourne and Sydney.
Why do they invest?
Other than to live in the house, the primary reasons for investing in property are income and wealth accumulation.
There are other secondary reasons such as moving up or down and owning other property as an investment, or having a holiday residence and maintaining it as an investment as well. In addition, there are “unintentional” property investors that may have inherited or acquired property.
A typical Australian property investor could be your neighbour as research finds that a significant number of residential investors are average Australian, who put their money in rural or regional areas as a secondary source of income and to earn equity.
In Newcastle, we are currently seeing a high volume of property investors at all of our open homes. The majority we see are, in fact, locals like my neighbours but we also attract many investors from outside of the region too!
If you would like to sell your current investment property and would like an appraisal, please call Annette directly on 0418447856.