Should ‘greedy’ property investors get the blame for our housing crisis?
Fingers are pointed at property investors for causing soaring house prices, but perhaps they should be pointed elsewhere.
However, the “greedy” tag seems to be thrown around way too quickly these days, and is slapped on millions of people simply trying to improve their lives financially.
I started buying investment properties almost 25 years ago, and I am increasingly struggling with guilt and confusion over the suggestion that all landlords are greedy.
A comedian a couple of years ago highlighted rising public sentiment when he declared to a packed show that “anyone who’s over 50 and owns more than one house is a c...”, and received a roar of approval from his audience of mostly under-50s.
State governments have been piling pain onto landlords too, by introducing increasingly tough laws and taxes in several states that target real estate investors, prompting some to make an exit. An analysis of ATO data by Property Investment Professionals of Australia found real estate investor numbers fell 7000 in 2022-23, while its own recent survey found 16.7 per cent of investors sold at least one property in 2024.
A couple of weeks ago, university academics yet again fired up my guilt. It was the release of the 20th annual Household, Income and Labour Dynamics in Australia Survey by the University of Melbourne.
The widely respected HILDA report says Australia is experiencing an “unprecedented housing crisis”, as 400 per cent growth in house prices over the past two decades – more than double wages growth – threatens to consign more younger adults to spending most or all of their working lives renting.
“Younger generations – especially first-generation immigrants and other groups without access to intergenerational housing wealth – are finding it increasingly difficult to enter the housing market,” it says.
HILDA report co-author Kyle Peyton says existing homeowners and their children can increasingly use housing equity to buy more properties and grow their wealth, at the expense of those who can’t afford to get started.
“As homeownership becomes more concentrated, a growing share of renters will be paying income to an asset-owning class whose wealth compounds with rising property values,” Dr Peyton says.
“This creates a reinforcing dynamic: housing wealth generates more housing wealth, while those without access to intergenerational assets – especially younger Australians – remain locked out.”
So there you go, property investors are stuffing it up for everyone else. Or are they?
Take a closer look and that may not be the case. Australian Taxation Office figures show the proportion of taxpayers who own investment properties dropped from 21 per cent to 19.4 per cent between 2014 and 2022, and the majority of those investors own just one rental property.
About 85,000 people – 0.3 per cent of the population – have four or more rental properties, ATO figures show.
It can also be argued that investors are not the culprits behind higher house prices, but that gong should go to surging demand for property caused by the almost 450,000 migrants on average entering Australia annually since the pandemic – up from around 220,000 a year in the 2010s and 170,000 in the 2000s.
Investors cop a lot of criticism but are vital to the housing market. Rents will continue climbing if investors exit, as it will push up demand for the fewer remaining rental properties.
Many landlords do not fit the greedy tag. They don’t raise rents sharply, they provide housing flexibility, and they are simply trying to improve their lives and those of their children without being a drain on the public pension purse.I am one of them.
There are few options to build wealth if you’re not an entrepreneur or business owner. Property and shares are the big two, and it’s much harder to grow a big share portfolio with borrowed money.
Until Australia starts building more houses or migration slows dramatically to cool soaring prices, successful real estate investors are going to have to live with the “greedy” tag. But it’s better than the alternative, which is living in financial fear and stress.
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“Greed is good.” The infamous line from fictional businessman Gordon Gekko in the 1987 movie Wall Street has divided opinion for decades, and has been viewed more negatively in recent years.