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
2 min
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).
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Australia’s housing affordability crisis is being fuelled by chronic undersupply, planning delays and rising development costs, as politicians continue to focus on the wrong solutions.
3 min
Australia’s housing crisis will not be solved by first-home buyer incentives or tax changes alone, with leading property figures warning governments must tackle supply constraints if affordability is to improve.
Speaking at the Kanebridge Quarterly Property Leadership Summit in Sydney last week, expert project marketing specialist Sam Elbanna, property investor and fund manager Paul Miron and property consultant Karla McNeice said that a lack of housing supply remained the central issue facing the market.
Elbanna, Director of CPM Realty with more than 30 years’ experience in project sales, argued that successive governments had focused too heavily on stimulating demand rather than addressing the barriers preventing new housing from being delivered.
“The misconception is that politicians think the way to solve the housing crisis is to drive demand,” he said.
“The reality is that’s not the way. This is a supply-side problem, and it needs to be solved on the supply side.”
Drawing on his experience in project sales, Elbanna said policies designed to help first-home buyers often had unintended consequences, pointing to previous grants that ultimately flowed through to higher property prices.
Instead, he said developers were facing increasing red tape, approval delays and rising costs, which were discouraging new housing supply.
“In the absence of stock, demand exceeds supply,” he said.
Miron, a Co-Founder and Fund Manager of Msquared Capital, said the housing debate had become overly focused on tax policy while overlooking broader structural issues.
He argued that affordability challenges stemmed from a combination of factors, including planning constraints, supply shortages, migration levels and interest rates.
“No-one can be 100 per cent certain on the real reason for property prices is going up,” he said.
“The reason why property prices are higher is a combination of interest rates, lack of supply, migration, vacancy rates and maybe taxes play a role.”
Miron was critical of recent federal housing policy changes, warning they could reduce the number of new homes being built and further constrain supply that was even highlighted in the budget.
He also highlighted the importance of the property sector to the broader economy, noting that residential real estate and related industries employed more than one million Australians.
McNeice, who advises developers on sales strategy and market intelligence, said understanding buyers had become increasingly important as affordability pressures intensified.
While affordability remained a major consideration, she said today’s buyers were focused on value rather than simply price.
“People are looking for value for money,” she said.
She said buyers were increasingly evaluating factors such as transport connections, walkability, nearby amenities and flexible living spaces that could accommodate changing family needs.
“What infrastructure is going on? Can I walk to the shops? Can I meet people at the local cafe?” she said.
The panel also discussed the mounting pressures facing developers, with Elbanna arguing that many projects become financially unviable from the moment a site is purchased.
“The viability of a development happens at the moment the site is bought,” he said.
He said rising construction costs, higher interest rates and overly optimistic feasibility assumptions had left some developers exposed as market conditions changed.
While acknowledging the growing number of smaller and first-time developers entering the market, Elbanna said property development required expertise across finance, construction, marketing and legal disciplines.
“It is actually a business that requires a level of expertise,” he said.
Looking ahead, the panel agreed opportunities remained in the market despite current challenges.
Miron said property should continue to be viewed as a long-term investment and cautioned against trying to time short-term market movements.
McNeice said success would increasingly depend on identifying projects that genuinely met changing buyer expectations.
Elbanna said affordable housing remained achievable, but developers needed to deliver more than just homes.
“We can provide affordable housing in this country,” he said.
“But we’ve got to wrap that affordable housing with the things that people want.”
As Australia’s housing affordability debate intensifies, the panellists agreed on one point: without a meaningful increase in housing supply, demand-side measures alone are unlikely to solve the nation’s property challenges.
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