Australia's Wealth Shift: From Entrepreneurial Risk to Property Portfolios

New analysis from the Committee for Economic Development of Australia (CEDA) reveals a pronounced migration of capital among working-age Australians, particularly the wealthiest, away from active business ownership toward passive property investment. Drawing on Household, Income and Labour Dynamics in Australia (HILDA) Survey data from 2002 to 2022, the report 'Bricks, not Businesses' documents a decline in the share of working-age individuals running employing businesses from 13.8% to 9.8% overall, with the steepest drop among the top wealth quintile—from 13.8% to 9.8%—while investment property ownership in that group rose 8.1 percentage points. Wealth composition shifted accordingly: business assets fell from 11% to 4.4% of total wealth for the wealthiest households, while investment properties (excluding the family home) climbed from 10.2% to 14.2%.

This pattern reflects policy distortions long favoring real estate via negative gearing and the 50% capital gains tax discount, which have outpaced support for startups and small firms. Small business capital gains concessions have not adjusted despite a 64% rise in asset prices since 2007. Recent federal budget measures, including tweaks to these incentives and new assistance for young businesses, represent initial rebalancing, though regulatory burdens remain a key barrier.

Broader corroboration appears in Reserve Bank-linked research showing higher-income and older investors dominating property markets, and analyses linking tax settings to reduced entrepreneurship and productivity risks. The trend underscores capital flowing into existing assets rather than job-creating ventures, with implications for economic dynamism amid ongoing business exits and regulatory challenges.