While the federal government’s First Home Super Saver Scheme formed the centrepiece of the 2017 budget in terms of its implications for younger Australians, the emergence of fractional property investment platforms represents an altogether different solution for addressing the issue of housing affordability.
That is the view of Property Investment Professionals of Australia (PIPA) chair Ben Kingsley.
Speaking to financialobserver, Kingsley said the rise of fractional investment groups such as DomaCom and BrickX represented a compelling proposition for Australian retail investors when it came to tapping into the property market as first homebuyers.
“I think they are definitely going to open up new and inventive ways to invest in property and we certainly welcome that,” he said. “We think it’s really exciting that the likes of DomaCom and BrickX are exploring this and we think there will be more entrants in the years to come.”
The First Home Super Saver Scheme will allow prospective homebuyers to contribute up to $30,000 to their super over and above compulsory contributions, which could then be withdrawn to purchase a home.
According to Kingsley, however, a greater focus on legislative provisions surrounding home equity release was needed.
He said a lack of educational awareness had resulted in many investors often being pressured into poor investments around property and there needed to be a greater understanding of how parents could help younger Australians draw on the family home to boost their chances of entering the market.
“The low-hanging fruit for me is to look at the intergenerational side of things … if we look at the London market, in excess of 20 per cent of parents are helping their children get into the market, but in Australia this is just around 3 to 4 per cent,” he noted.
“We do need to have more of a conversation in explaining to parents the pros and cons of putting property up as a security to help facilitate new entrants to the market. “It can be as good as putting money into a term deposit and with your asset appreciating, there are many benefits for parents helping their children by releasing that equity out.”
He welcomed the work of DomaCom and BrickX in opening up access to the Australian residential property market, but said further innovation in the ways in which retail investors could buy or sell property as an asset class should be expected.
“In 10 to 15 years down the track, we could see a potential exchange similar to the ASX [Australian Securities Exchange], where people could offer their property up on the market, or part of that equity could be on the exchange,” he said.
“We want to see more of this disruption coming to the property market and it could be a natural part of the evolution of residential property’s journey in Australia.”
Daniel Paperny, Financial Observer, 30 May 2017