Fewer Australians are putting their capital into businesses, with the drop most acute among the wealthy, new data from the Committee for Economic Development of Australia (CEDA) shows. Instead, more wealth is flowing into property.
The proportion of working-age Australians who run a business which employs people fell from 13.8 percent in 2002 to just 9.8 percent in 2022, according to the report called “Bricks, not Businesses.”
Over the same period, the numbers of people who own at least one investment property went up by 8.1 percentage points.
That trend is even more pronounced among the wealthiest 20 percent of households, where the share of wealth tied to business fell from 11 percent in 2002 to 4.4 percent in 2022.
Meanwhile, the share of wealth tied to investment properties rose from 10.2 percent to 14.2 percent.
Challenging Business Conditions
The economic climate has long been tough for businesses. In the 2025–26 financial year, 375,331 businesses exited the market, a number broadly similar to the previous three years. Some, such as Sydney’s Lamia Super Deli, were forced to close after decades of serving customers.
And more businesses are being forced to shut their doors after running into financial difficulties.
In 2024, there were 11,053 instances of companies entering administration or voluntary liquidation. That number rose to 14,722 in 2025 before dipping only marginally to 14,011 in the 2025–26 financial year.
CEDA Economist Daniel Beadle said property investment remained a better option than owning a business in an increasingly uncertain economy.
“That’s not a coincidence. It’s the predictable result of a tax and policy system that rewards passive investment in existing property over the kind of productive risk-taking that creates new businesses, new jobs and a more dynamic economy,” he said.
According to the analysis, policies like negative gearing and the capital gains discount have consistently favoured real estate over business investment, while assistance for start-ups and small enterprises has lagged behind.
Despite a 64 percent increase in prices since 2007, small business capital gains concessions have remained at the same asset and turnover thresholds.
And the flight of capital from business to property is particularly the case among high-net-worth individuals and families, CEDA has found.
“The Australians most financially equipped to take a risk on a new business are doing so less, with more of their wealth concentrated in property,” Beadle said.
Policies Have Favoured Property
The drivers of declining entrepreneurship are complex and layered, but addressing distortions that favour property investment over businesses can help correct this trend, the report said.
It also found that the federal budget for 2026–27 and subsequent policies, such as new assistance for small and young businesses and changes to negative gearing and the capital gains discount have made “meaningful progress” in rebalancing these incentives.
“These changes are a genuine step in the right direction,” Beadle said. “Removing some of the long-standing advantages enjoyed by property investors, while improving conditions for people starting a business, is exactly the kind of rebalancing we need.”
The economist cautioned, however, that tax settings alone would not be sufficient to revitalise the nation’s entrepreneurial base, emphasising that CEDA would closely monitor measures announced in the federal budget to reduce the regulatory burden.
“Businesses consistently tell us that regulation is one of the biggest handbrakes on getting started and growing. In some cities, opening something as simple as a café can mean working through more than 30 separate council steps before you’ve sold a single coffee,” he said.
Although there are concerns that falling home prices could have a greater impact on household wealth as more people invest their capital in housing rather than productive assets, Beadle said these concerns were exaggerated.
Even after recent falls, national dwelling prices remain more than double their 2010 level.
