A small group of heavily indebted, multi‑property owners is emerging as a key vulnerability in Australia’s housing market.
In a fresh bulletin article drawing on newly linked tax and survey data, the Reserve Bank of Australia (RBA) has traced how the investor landscape has evolved between 1999–2000 and 2022–23, highlighting an older, higher‑income investor base and a concentrated subset of borrowers carrying very large debts across both investment and owner‑occupied properties.
The Reserve Bank explained that the research was based on person‑level records from the Australian Bureau of Statistics’ Person Level Integrated Data Asset, enhanced by the Wealth and Housing Assets Module.
The central bank estimates there were 2.3 million individual housing investors in 2022–23, roughly 10 per cent of the working‑age population.
It found that about 70 per cent of those investors own a single investment property, while the remaining 30 per cent own multiple dwellings and collectively account for around half of all investment properties.
Over roughly 20 years, the share of investors with more than one property has risen by about 7 percentage points, indicating a gradual rise in multi‑property portfolios.
The RBA noted that investors with several properties typically relied more heavily on borrowing and cautioned that this could become a flashpoint in a downturn.
“Investors holding multiple properties tend to carry more debt. Resilience could be undermined if the portfolio of properties is highly leveraged (with little equity cushion). In a negative shock, synchronised sales of highly leveraged investment properties could depress the value of all properties and thus amplify the housing price cycle in a downturn,” it said.
The study revealed that around 80 per cent of investors who own multiple properties hold them within a single state or territory, and about 30 per cent are concentrated in the same local market.
Investors are older and skewed toward higher incomes
The demographic profile of investors has shifted markedly since the turn of the century.
The Reserve Bank reported that the median age of housing investors had moved from 45 to 51 over the study period, while the share of investors aged over 60 has climbed from 12 per cent to 28 per cent.
Within that older cohort, more people now hold mortgages against their investment properties than in the past.
Yet the RBA pointed out that only around half of investors aged over 60 had an investment loan outstanding in 2022–23, noticeably below the share for younger investors.
On income, the central bank stated that higher‑earning households were far more likely to hold an investment property than those on lower incomes.
In 2022–23, it said the highest income quintile made up nearly 40 per cent of all housing investors.
Where leverage is stacked the highest
The article also drilled into how investor debt was structured at the household level.
It found that most investor households have loans secured against their investment properties and that roughly one‑third have debt on both an investment property and their own home.
When the Reserve Bank looked at debt‑to‑income ratios across these borrowers, it found clear pockets of stress.
Using data from 2021, it estimated that around 20 per cent of leveraged housing investors had overall housing debt above six times their income once all investment and owner‑occupied loans were added together.
The analysis showed that the heaviest leverage tended to sit with households that carry both investment and owner‑occupier debt.
The RBA reported these borrowers were more likely than those with only investment loans to have very high DTIs and that they account for about 70 per cent of investor households whose debt‑to‑income ratios exceed the six‑times threshold.
The RBA described households with a single leveraged investment property as holding the smallest balances, with median housing debt of around $220,000.
At the other end of the spectrum, it highlighted a much smaller group who combines multiple investment properties with a mortgaged owner‑occupied dwelling.
It noted that this segment “accounts for only 10 per cent of investor households” but had a median of $1 million in outstanding housing debt.
The Reserve Bank observed that investors who own at least two investment properties but have paid off their home loan tend to hold less total debt than people with one investment property and a mortgage against their residence.
It reported that investors in the top income quintile have median outstanding housing debt of about $720,000, while those in the lowest quintile hold roughly $300,000.
[Related: MFAA: Brokers swamped by investor queries after budget]
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