The faster pathway to building wealth is no longer how much you earn, investors believe

Almost one in two Australian investors believe what they own is more important than how hard they work and the income they earn for building wealth, according to a survey of more than 2,000 investors conducted by online trading platform Stake. This attitude reflects the fact that house prices have risen faster than wages for many years, according to Stake CEO, Jon Howie.

“In Australia, over the past 30 years, house prices have risen by an average of 8 percent per annum, compared to around 3 percent for wages, and it’s a similar story in New Zealand,” Mr Howie said.“Given the property market’s increasing barriers to entry, people are looking for other routes to building wealth. Rather than simply waiting for things to get better, they are upskilling, delaying gratification and engaging with financial markets to supplement their hard work.”

Investors cited slow wage growth as among the three biggest barriers to achieving their financial goals. Almost one in four investors expect no increase to their salary this year, or even a decrease, amid early signs that the labour market is loosening. While the overall unemployment rate remains low at 4 percent, Australian Bureau of Statistics figures released this week show there are 1.9 million people who would like to work but can’t find a job and 1.7 million workers who would like more hours.

Mr Howie said the survey results demonstrated a longer-term shift in our economy and the mindset of investors. “… the traditional blueprint to achieving financial security – namely getting a ‘good job’ and buying property – is not as accessible or reliable as it once was,” he said.

Rapidly rising house prices have made property ownership unattainable for some investors, with only 11 percent of survey respondents ranking real estate as the most accessible asset class for building wealth.

While investors are cutting back on discretionary spending to cope with today’s higher costs of living, about 75 percent are still putting some of their income into investments. The most common amount was 1 to 5 percent of their salary. Younger people have been the most active over the past six months, with 85 percent of 18 to 24-year-olds buying assets during this period. One in five investors said they intended to spend their stage three tax cut savings buying shares.

The survey revealed the five biggest motivations for Australian investors, starting with retiring and living off their investments; and supplementing their wage or salary with investment income. The next biggest motivations were funding holidays and travel, cutting back on hours and buying a home.

Australian investors have various definitions of financial success. More than 85 percent said being debt-free and owning their own home were the two most important financial achievements. Other definitions included being able to live in the neighbourhood they want (77 percent) and having the capacity to help family members (75 percent).

Former President Donald Trump said he would ban undocumented immigrants from obtaining home mortgages, a move he indicated would help ease home prices even though these buyers account for a tiny fraction of U.S. home sales.

Home loans to undocumented people living in the U.S. are legal but they aren’t especially common. Between 5,000 and 6,000 mortgages of this kind were issued last year, according to estimates from researchers at the Urban Institute in Washington.

Overall, lenders issued more than 3.4 million mortgages to all home purchasers in 2023, federal government data show.

Trump, the Republican presidential nominee, made his comments Thursday during a policy speech to the Economic Club of New York in Manhattan.

Housing remains a top economic issue for voters during this presidential election. Rent and home prices grew at historic rates during the pandemic and mortgage rates climbed to levels not seen in more than two decades. A July Wall Street Journal poll showed that voters rank housing as their second-biggest inflation concern after groceries.

Both major candidates for the 2024 presidential election have made appeals to voters on housing during recent campaign stops, though the issue has so far featured more prominently in Vice President Kamala Harris ’s campaign.

Trump has blamed immigrants for many of the nation’s woes, including crime and unemployment. Now, he is pointing to immigrants as a cause of the nation’s housing-affordability crisis. Yet some affordable-housing advocates and real-estate professionals said Trump’s mortgage proposal would fail to bring relief to priced-out home buyers.

“It’s unfortunate that given the significant housing affordability crisis that is widely acknowledged across most partisan lines, we are arguing about a minuscule segment of the market,” said David Dworkin, president of the National Housing Conference, an affordable-housing advocacy group.

Gary Acosta, chief executive of the National Association of Hispanic Real Estate Professionals, a trade organization, said, “It’s just another effort to vilify immigrants and to continue to scapegoat them for any issues that we have here in the United States.”

A Trump campaign spokeswoman didn’t immediately respond to a request for comment.

Undocumented immigrants in the U.S. can obtain an obscure type of mortgage designed for taxpayers without Social Security numbers, most of whom are Hispanic. The passage of the USA Patriot Act of 2001 allowed banks to use identification numbers from the Internal Revenue Service as an alternative to Social Security, extending a number of financial services to people without legal status for the first time.

Mortgage loans for undocumented immigrants are typically higher interest and borrowers include legal residents who have undocumented spouses, Acosta said. Lenders include regional credit unions and community-development financial institutions.

In his speech, Trump said that “the flood” of undocumented immigrants is driving up housing costs. “That’s why my plan will ban mortgages for illegal aliens,” he said.

Trump didn’t elaborate on how he would enact a ban on such loans.

Though mortgages for undocumented people living in the U.S. are relatively rare, residential real-estate purchases by foreign nationals are big business , especially in expensive coastal cities such as New York and Los Angeles. These sales have declined in recent years, however.

Close to half of foreign purchases are made by people residing abroad, while the other half are made by recent immigrants or residents on nonimmigrant visas, according to an annual survey by the National Association of Realtors. Many affluent foreigners buy U.S. homes with cash instead of obtaining mortgage financing.

In his Thursday speech, which focused mostly on other economic matters such as energy and taxation, Trump proposed other measures to bring down housing costs, including cutting regulations for builders and allowing more building on federal land. Similar ideas appeared in the housing policy outline Harris released in August .

The former president has spoken on housing-related issues in speeches at other recent campaign stops, including in Michigan last month, where he touted his administration’s 2020 overturn of a policy that had encouraged cities to reduce racial segregation .

“I keep the suburbs safe,” Trump said. “I stopped low-income towers from rising right alongside of their house. And I’m keeping the illegal aliens away from the suburbs.”

The faster pathway to building wealth is no longer how much you earn, investors believe

A new survey reveals almost half Australian investors think the route to achieving their financial goals is not through wages

The Republican nominee says it would help bring down home prices, though these buyers account for a fraction of U.S. home sales