Australians are using home equity wisely

Over the last four years the number of investment property loans in Australia has grown by 37% compared to an increase of only 4% in the number of owner occupied loans.

Check out the latest findings from the Roy Morgan Research Consumer Single Source survey of approximately 45,000 people per annum thanks to Announcer.


The survey reported that the 35 to 64 age group accounted for 78% of the increase in the growth of investment property loans over the last four years.

Home owners

The study also showed that while the proportion of over 50s with an owner-occupied home loan increased, the proportion of under 35s with owner-occupied home loans decreased. For the 2011/2012 tax year it was reported that 19.3% of Australian tax payers owned an investment property. That’s nearly one in five compared to just 12.9% about 20 years earlier (1993/1994).

And very few invest more than once

According to the ATO data (2011), 72.8% of individuals who owned an investment property owned just one. Meanwhile, 18.9% of those individuals owned two properties and just 0.9% of the same owned six or more.

The gap is closing

Due to the historically low interest rate environment, many people are using the equity in their current property to purchase an investment property. With rates so low, the gap between investment loan repayments and the rent received has reduced compared to a few years ago. Sometimes the gap is very minimal – particularly after a refinance.

Attitudes are changing

We are starting to see a very different attitude from people purchasing property. A few years ago, property purchase was all about owning your own home. Most clients also thought that investing in property would be at the expense of owning their family home. These days, with low interest rates and first home owners being priced out of buying their family home, we are seeing more people take on investment properties as a solution to getting a ‘foot in the door’.

Confidence is increasing

Our older home owners have seen the benefit of some good capital growth over the last few years. They are now feeling more confident to use some of this recent equity, coupled with low interest rates, as an opportunity to start investing in their financial future.

As we look at the prospect of pension cuts and increasing the work life expectancy to the age of 70, this seems to be a step in the right direction for many of our clients.

Craig James (Chief economist at CommSec) has pointed out that Australians are holding their savings in the following places: 27% in the bank 24% in real estate 17% paying down debt 10% in the share market.

He stated that consumer confidence has been low since the GFC and that “time cures all ills”. He would like to see consumers take on more investments.

Most people struggle with the concept of purchasing an investment property while still trying to pay off their home mortgage. Guess what – you’re not alone! Only 19.3% of Australians appear to be comfortable with this.

Interested in using the equity in your home? Contact CPS Property today.