Wealthy people own a lot of property. I know. I fell off my chair.
With the housing market in crisis, The Guardian made a bit of a stir last week with analysis of tax figures that showed that a quarter of Australia’s rental properties are owned by the top 1% of tax payers:
Only 1% of Australian taxpayers own nearly a quarter of all property investments across the country, amid concerns over escalating rates of wealth concentration.
Data provided by the Australian Taxation Office has revealed the extent of that concentration, with more than 7% of property investors – or 215,321 people – accounting for 25% of all property investments.
That 7% also have three or more interests in investment properties across the country, with 1% of investors – or just 19,895 people – currently holding six or more investment interests.
It showed that while just fewer than half of property investors held one interest in an investment property, only 15% of the total number of taxpayers in Australia were property investors.
Just more than 30% of the country’s roughly 11m private residential dwellings are considered property investments.
The figures also revealed that a clear majority of that 1% were over the age of 50, contrasting with recent data from the Australian Institute of Health and Welfare, which showed that more than 60% of renters are under 35.
I have a couple of thoughts about this.
The first is ‘Duh. Wealthy people invest in real estate. That’s hardly news.’
The second is what’s the causation here? Is it that being wealthy enables you to buy up investment properties?
Or is it that owning investment properties makes you rich?
My guess is that it’s a mix of both. But the way the Guardian wants to tell the story is that people get rich, and then rich people buy properties.
But I know for sure that it also runs the other way. Ordinary people buy properties, and then owning properties makes them rich.
But the other thing about this is that I feel like the Guardian is just waking up to a generations old secret – that wealthy people build wealth in real estate.
This has been going on for hundreds of years. Land is always the key to wealth.
So of course wealth people have a lot of exposure to investment property. That’s been the case since the Battle of Hastings.
(No idea what that actually was, but pretty sure it was a long time ago.)
And yes, wealth is unequally distributed. That’s always been the case too.
In fact, it’s generally been worse.
But the point is, the wealthy have always viewed land and property as one of their most stable asset classes.
Now you can hate that if you want. The world is uneven and unfair. No argument from me on that.
But what are you going to do about it?
Hate the rich?
Or join them?
JG.