SYDNEY, July 4, 2022 /PRNewswire/ — Australia’s severe home affordability challenges are only set to worsen, as limited access to finance hampers the ability of small-scale developers to correct entrenched supply-demand imbalances.
These challenges present potential opportunities for investors if they are able to find transparent and reliable channels for providing funds to high-quality housing projects.
AUSTRALIAN CITIES THE WORLD’S WORST FOR HOME AFFORDABILITY
Australia’s urban housing markets currently rank amongst the worst in the world in terms of affordability.
A 2022 report from urban policy think tank Demographia found Sydney is the second least affordable urban housing market out of 92 markets surveyed, ranking only behind Hong Kong.
According to the report, anything above an income-to-house price ratio of five is considered unaffordable. In Sydney the figure is a staggering 15.3 for median homes, while in Melbourne the ratio is above 12.
Limited new building approvals are one of the chief culprits for the supply and affordability challenges. Both these problems are likely to worsen in the absence of major intervention.
A recent NHFIC report indicates Australia will face a housing shortfall of more than 164,000 dwellings from 2025-2032 as growth in demand outpaces the construction of new homes.
ACCESS TO FINANCE CRITICAL TO BUILDING MUCH-NEEDED HOMES
This week the NSW government announced measures in its upcoming budget to unlock land and housing infrastructure, for the purpose of improving housing supply and affordability in what has been called ‘the slowest planning system in Australia‘.
Urban Development Institute of Australia (UDIA) NSW chief executive Steve Mann welcomed NSW’s $500-million budget investment, but said it was long overdue and would only ‘go some way to addressing housing affordability in the short-term.’
‘We need to see results quickly, with dwelling approvals down 24 percent from the supply peak,’ Mann said in an article in The Urban Developer.
‘Improving housing affordability requires a long-term plan… we need to spend the next two years developing solutions that will enable consistent funding to avoid the feast or famine cycle that we have been in over recent years.’
Comparably, in a survey of small-scale property developers conducted in the UK, only nine percent pointed to improved tax policies when asked which factors will most enable them to build more homes. Only 10 percent said improved planning systems, while 17 percent said an improving economy.
Far and away the highest response was better sources of funding, which was highlighted by 42 percent of survey participants. This exemplifies the challenges small-scale developers face in securing finance for their projects. We believe the same problems exist here in Australia.
INVESTORS HAVE THE OPPORTUNITY TO HELP SOLVE THE SHORTFALL IN HOUSING SUPPLY
CEO and co-founder of CrowdProperty Australia David Ingram said banks are failing small-scale developers, which in turn presents an opportunity for wholesale investors.
“We know the trust is largely gone between banks and small-scale developers,” Ingram said. “Securing finance as a developer is complex, it’s slow, it’s expensive — it can take over six months to get a yes or no answer, by which time the development opportunity is gone.” Marketplace lenders provide a channel for wholesale investors to access the financial opportunities created by the failures of traditional lenders.
As a marketplace lender, CrowdProperty is an online platform that specialises in providing property project loans rapidly and efficiently to small-scale developers, using funds sourced from wholesale clients and professional investors.
“For investors, our expert due diligence by an independent team with decades of experience gives investors access to exclusive, high quality projects that need finance. Coupled with first mortgage security and up to seven percent target interest returns means it’s a better deal for all parties,” Ingram said.
“We can’t affect policy around taxes and planning, but we can deliver better finance for small-scale developers.”
For more information or to organise an interview regarding the opportunity for investors amidst the housing affordability crisis please contact Jamie Millar, jamie.millar@crowdproperty.com.au.
Visit crowdproperty.com.au to learn more.
DISCLAIMER
The CrowdProperty Investment Trust (the Trust) is an unregistered managed investment scheme. The Trust is only available to investors that are wholesale clients as defined in s761G of the Corporations Act 2001 (Cth).
Investors pledge their funds in the Trust which makes first mortgage secured loans to SME property developers.
Withdrawals can only be made when the Investor funds are in Cash Interests in the Trust. Refer to the Information Memorandum (IM) for more information.
CrowdProperty Pty Ltd (ACN 633 516 195) is the investment manager of the Trust (Investment Manager). The Investment Manager is a corporate authorised representative (No. 001285637) of Quay Wholesale Fund Services Pty Ltd AFSL No. 528 526, ACN 647 044 602. The Investment Manager’s authority under its Corporate Authorised Representative Agreement with Quay Wholesale Fund Services Pty Ltd is limited to general product advice regarding the Trust only. Quay Wholesale Fund Services Pty Ltd is the trustee of the Trust and the issuer of its IM (Trustee).
The contents of this document are not intended as financial product advice and have been prepared without taking into account your personal circumstances, investment objectives or particular needs. You should read the Information Memorandum for the Trust in full to consider whether an investment is appropriate for you.
Neither the Investment Manager, Quay Wholesale Fund Services Pty Ltd, nor the Trustee guarantee the repayment of capital, the performance of any investment or the rate of return for the Trust. Past performance is not necessarily indicative of future performance. An investment in the Trust is not a bank deposit and is subject to greater risk than cash investment products including loans of income and part or all of the capital itself.
We strongly suggest that you seek your own professional financial or legal advice prior to any investment decisions.
About CrowdProperty Australia: CrowdProperty is a leading online specialist marketplace ending platform providing finance to small-scale property developments. We meet the need for finance from property professionals who build high quality property developments, with a source of funds from wholesale investors. www.crowdproperty.com.au
