What advisers should say to female property investors right now

Bianca Hartge-Hazelman,  Editorial Team,  No More Practice Education

Australian women have a bit of a thing for owning residential property and I’m certainly one of them. But lately I’ve been questioning my love for all things bricks and mortar.

Data recently published in the Australian Bureau of Statistics’ September Gender Indicators Report suggests that women have a slightly higher ownership stake in residential property that they live in than men, at least by population number.

This could mean that women have potentially more to lose by making a wrong decision right now.

Chris Bates who is a financial adviser and mortgage broker at Wealthful has been helping clients for many years invest in Australian property, in particular women.

But lately he’s been talking to them a little differently to help prepare them for a drop in value.

“There are three things that could hit the market right now. The Royal Commission and we have no idea how that is going to play out. A new government and changes to negative gearing and capital gains tax, and the expiration of investment only loans.”

“You can’t just always believe that property goes up in value. These things that are happening right now aren’t small things. So taking too much risk for potential return is risky.”

In 2015–16, Australian women were more likely than men to live in a home they owned or were buying (60 per cent compared with 56 per cent), ABS data shows.

Young women were also more likely to be buying a house than young men: around 20 per cent of men and 26 per cent of women aged 15 to 35 years had a mortgage.

Indeed in February, a new report also predicted that female property investors were becoming even more active.

The 2017 Westpac Home Ownership Report found 71 per cent of women were looking to buy versus 61 per cent of men, and that 16 per cent of women were looking at investment property compared to 13 per cent of men.

Bates says the three keys to people investing now is to buy in premium suburbs, not to over extend themselves on debt and buy a property that suits your long-term needs such as family.

“If you are buying something when you are single - regardless of whether you are male or female - while you might buy a small unit with the best intentions at the time, life changes. Really what you are buying is an investment.

“You have really got to buy something that you can afford to keep and that will suit your future needs.

He also says that clients need a bit of a reality check on their expectations for capital growth.

“If you put every dollar you have into buying a property in the hope of capital growth, you are going to be coming unstuck at the moment.

“If you are single, a lot of the best advice is often to keep saving in a bank account in light of rising and falling property prices at the moment.

“There is also regulatory uncertainty. Royal Commissions don’t happen every year. This is a huge event and a lot of focus is going to be around banking and tighter lending standards.

“The other thing is the Federal Election and the end of negative gearing and a reduction in the capital gains tax. That could all change in May.”

On top of that a large number of interest only loans are expected to move to principal and interest in the years ahead, which means repayments will become more expensive and some investors may be forced to sell.

“It’s an unknown how it will all affect the property market. What it is all driven by is human behaviour and optimism about the future.

“But one thing that’s for certain is that when you change policies on negative gearing you are saying that property investing is no longer as attractive to investors as it used to be.

“Future growth rates will have to dramatically drop. And there is not as much money to be made in property.”

If you have clients who want to take action in the current market here’s some helpful advice. Encourage them to buy property that suits their long-term goals and seek out bargains in premium suburbs. Alternatively if you have clients who already own property like this, now is probably not the time to be selling.

Bianca Hartge-Hazelman writes on women’s money matters and is the publisher of Financy and The Financy Women’s Index

The opinions expressed in this content are those of the author shown, and do not necessarily represent those of No More Practice Education Pty Ltd or its related entities. All content is intended for a professional financial adviser audience only and does not constitute financial advice. To view our full terms and conditions, click here.

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