Yes, that’s right, the Australian residential property sector is a $7-trillion industry – over 4 times bigger than the total value of the ASX200 companies. Australia’s love affair with residential property has resulted in over 65% of this nation’s wealth invested in it.
It’s little wonder really, with the exceptional ongoing returns shown by this asset class over the long term, that it’s been the star performer and most resilient – outperforming all other major Australian investible asset classes (8.1% over 10 years and 10.3% over 20 years according to Russell Investments and the ASX).
However, of the multiple columns I read each day on housing affordability, it isn’t often that the rhetoric stretches beyond the fate of the First Home Buyer (FHB).
Over the last decade, we’ve seen major disruption to well-established industries. Think AirBnB for travel accommodation, Uber for taxis, yet until recently, there has been little disruptive innovation that goes meagrely beyond optimising the status quo.
Maybe we need to start thinking about things differently and move the conversation away from housing affordability to accessibility.
The Australian dream has moved on from owning a house on a quarter acre block. It’s now about owning your first home and then working towards your investment property and further exposure. The bar has been moved. We’re living in a nation of haves and have nots.
Enter the rise of Fintech.
And welcome the exposure of asset classes as never seen before.
Fintechs pride themselves on being nimble; agile.
Democratisation is often their creed. Customers are their world and they obsess about providing exceptional customer service and customer experience. It’s about making something that may have once been exclusive, more accessible to everyone. There’s no better way to do this than with the harnessing of technology.
But when it comes to access, this is where the concept of fractional property investment comes in. Fractional property investment has long been around through private syndicates and various clunky unlisted vehicles. It’s never really been an option open to everyone (retail investors) or at the very least accessible to everyone from an understanding point of view or ease of use.
BRICKX (www.brickx.com) allows Australians to be able to own a share in a property without the need to own the entire house by providing investors with the opportunity to access those aspirational, yet increasingly unaffordable, suburbs. The ability to be able to invest in line with the housing market by buying Bricks (starting at under $100) allows them to be able to build an investment that moves with the underlying property market, rather than sitting in a high interest bank account. If the property market continues to power along, so should the growth of the investment.
What further differentiates BRICKX from the significant number of property spruikers who are clogging up your Facebook feed? BRICKX is providing investment access to existing stock in aspirational and affluent suburbs in Sydney and Melbourne (from Bondi Beach to Double Bay, Prahran to Port Melbourne).
BRICKX also counts the Head of Research at CoreLogic and Chief Economist from realestate.com.au on its professional Property Team.
In addressing the accessibility issue, BRICKX has undertaken to solve for a number of other inefficiencies in the residential property investing market including ability to diversify across different properties (the investor chooses which investments to invest in), removing management hassles and goes about its business with refreshing transparency. However, perhaps the biggest innovation is the exchange, where investors are able to put their Bricks up for sale when they wish. The median time for an investor to liquidate their position is currently 11 hours. Now how does that compare to selling a house?
By providing access to an established residential property market from under $100, BRICKX has amassed over 6,500 investors within a relatively short period. This includes those saving for a house deposit in line with the market, parents saving for their kids’ future deposits to more mature investors and Self Managed Super Funds who are able to now consider quality residential property in their wider investment and savings strategy.
Residential property seems to have no obvious signs of waning in terms of its attractiveness as an investment class, however Australians are starting to think differently about how they access it. BFM
Anthony Millet is the CEO of BRICKX