New data suggests close to one-fifth of first-time property investors may have fallen into creating a property portfolio “by accident”.
MCG Quantity Surveyors has found that 23 per cent of those with an investment property have lived in it initially as owner-occupiers, for an average of four years and 11 months.
According to MCG, data collected from the preparation of tax depreciation schedules revealed one-fifth of landlord clients stepped into property investment simply because they did not want to sell when the time came to change properties.
“Many of these owners seem to have fallen into their first investment, rather than made a strategic decision to become a landlord,” said Mike Mortlock, managing director of MCG Quantity Surveyors.
“It’s a fairly stunning result given the broad perception of property investors as a calculated, high-earning cohort set to tactically snap up all the available real estate.”
Mr Mortlock said the length of time these investors chose to stay in their initial homes shows that they were not strategic first home buyer investors, cashing in on stamp duty concessions or grants by living in the dwelling for the minimum period of time.
“Such a group always planned on being investors, but they would be a very small percentage of those in our research, otherwise the average resided-in period would much be lower than five years,” he said.
Mr Mortlock predicts Sydney and Melbourne’s dwindling housing market could give rise to more “accidental investors” looking to take advantage of house prices.
“Around 60 per cent of all property transactions in Australia occur in Sydney and Melbourne – two markets where price softening is now firmly entrenched,” he said.
“As such, one of the reasons a home owner in these southern capitals might choose to retain their old residence as an investment is because their hoped-for sale price is now less achievable."
Mr Mortlock also highlighted that it is this group who will likely be the most affected by changes to negative gearing and the capital gains tax should Labor be successful at the next election.
“Most of these landlords own just one property and are mum-and-dad style investors looking to get a financial step-up before retirement,” he said.
“It’s this group who will be most impacted by any future changes to negative gearing and capital gains tax, or upward movements in interest rates.
“In our experience, those with the largest property portfolios are the least likely to care about negative gearing or tax changes because they tend to be positively geared.”
Join The Nest Egg community
We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians
Your email address will be shared with nestegg and subject to our Privacy Policy
Join The Nest Egg community
We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians
Your email address will be shared with nestegg and subject to our Privacy Policy
The top 10 suburbs that can expect short-term capital growth
RBA cuts start ‘mini housing boom’
Market low means it’s time for first home buyers
‘Horrible’ and high-risk: Is an apartment a good investment?
Why tax deductions could decide the winner of 2019’s The Block
Property investors bullish on the market
most viewed
Superannuation
Super fund slammed at Shonkys 2019
Shares
Gen Z women shaking up the sharemarket scene
Cryptocurrency
In 2019, Boomers boast the biggest uptake of crypto trading
Property
‘Horrible’ and high-risk: Is an apartment a good investment?
Listen to
What the heck is with robots and tech - ETFs explained
More podcasts
Find super’s sweet spot
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.