Will property crowdfunding take off in Australia?

Investors who feel bewildered by the ever-changing regulations on bank loans and costly mortgages should consider entering the Australian property market through crowdfunding.

A new study conducted by the University of South Australia (UniSA) in partnership with DomaCom, suggests that crowdfunding could become a viable new vehicle for investors trying to make headway into the country’s increasingly challenging property market.

Braam Lowies, the study’s lead researcher, noted that while the concept was relatively new in Australia, it had been successful in the United States and United Kingdom for approximately seven years.

Young investors should consider crowdfunding

A survey conducted as part of the study showed that crowdfunding attracted a mix of investor types, with older Aussies aged between 55 and 64 representing 33% of investors – the largest cohort in the study.

Surprisingly, only 4% of respondents were younger than 35, despite the crowdfunding platform’s aims.

“If you speak to the crowdfunding platforms involved [in the study], the goal was to get younger people involved in property investment because of all the difficulties they do have these days to invest in property,” Lowies said.

The study also found that the habits of buyers involved in crowdfunding varied greatly and were dependent on age.

“Younger people do actually invest higher amounts of money, where older people will rather invest smaller amounts,” Lowies said. “Higher amounts of their investment portfolio will be in cash and cash equivalents given the later stage of their lives.”

How does it work?

Property crowdfunding investors use digital platforms to invest in the purchase price of a property, with people able to invest as little as $1,000.

The property is sold once the sale price is achieved by any given number of investors.

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Source: Will property crowdfunding take off in Australia? – Your Investment Property