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ISCOVER
A new report has shown Australians are the richest people on the planet and, apparently, it’s all thanks to our houses.
The study by the investment bank Credit Suisse has found that every Australian adult was worth an average $US225,000; well ahead of second-place getter, the Belgians at $US173,000.
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And the root cause of our good luck? Yes, it’s home ownership. The study found that the average Australian household had $319,700 of equity in their homes, which represented about 60 per cent of each person’s wealth.
The report follows on from recent data that showed 1.8 million Australians own an investment property or 6.52 per cent of the overall population (although that number does include minors). While according to recent data from the Australian Bureau of Statistics, investor lending now constitutes 50 per cent of all home loans in the country.
Such has been the rate of investor lending, CBA’s general manager broker sales, Sam Boer, recently told The Adviser that “2014 would well turn out to be the year of the property investor”.
However, Mr Boer added that a cooling market could throw up some real challenges for investors. “If anything, the current state of the market leads to more questions such as: Will these trends continue? Are investors concerned about the recent price increases in our two largest cities? Are investors looking to ‘cash in’?”
RP Data’s senior research analyst, Cameron Kusher, agrees that investors looking to buy into ‘hot’ markets such as Sydney and Melbourne have arguably missed the boat by a good two years.
Mr Kusher also fears a glut of investor property could hit the market if other investment asset classes – such as shares – improve.
“I think that’s a very real risk at the moment,” he said. “Housing has always been a long-term asset class and at the moment investors are simply shopping around to park their money somewhere; but are these investors in there for the short or the long term?”
Mr Kusher also feared that, due to low rates, investors may be unconsciously over-borrowing.
“That’s certainly a trap people could fall into – whether that’s from brokers or banks or just a lax attitude by the borrower because borrowing’s so cheap at the moment,” he said.
