Gone are the days where property investment is dominated by men. Now nearly half (47%) of Australians who own investment property are women. Susan Farquhar says there are 5 reasons why they are better than men
Kevin: Gone are the days where property investment is dominated by men. Nearly half – that’s 47% – of Australians who own investment property are women. That’s according to an analysis of data from the Australian Taxation Office by the Property Council of Australia. Why is that so, and are women better investors than men? To answer that question, Susan Farquhar joins me, managing director of Calla Property.
Susan, thank you so much for your time.
Susan: It’s a pleasure, Kevin. Thanks for having me.
Kevin: It must be delightful for you to see women becoming more dominant as property investors. What’s behind this, do you think? Why are they?
Susan: I think that there is a lot more information out there for women about “a man who is no longer a solid financial plan.” Like you said, gone are the days where men dominate this sphere, and gone are the days where men and women just got married and shared all of the finances and reaped the rewards of that.
For today’s working woman, there’s a lot of information about saving for their own retirement. The government is not really going to do that for us anymore. They have to contend with the 15.3% wage gap. They have to work 12 years longer to have the same superannuation as their male counterparts. So, there is a whole lot of information about why it’s pressing to start to look for their future security through investment.
Kevin: A couple of interesting stats there, which we should really pick up on. A main concern, I guess, for women is security in retirement, and you said there that the man is no longer the plan. It’s staggering that women have to work, because of that wage differential, an extra 12 years longer than men to have the same amount of superannuation. Is that changing? Is that gap closing at all?
Susan: I remember when I was at university and I studied this – so that was in 1992 – the wage gap then was 12%, so it would suggest that it’s actually getting larger. And I think part of that, too, is that women are earning a lot more than they used to and are in better full-time jobs for longer – I’m talking about a generation or two ago – but men also are earning significantly more. If you look at the bonus structures with CEOs at banks and other big companies, they’re massive incomes, and I think that contributes quite a bit to the wage gap.
Kevin: Do you think, for that reason, women are probably a little bit more cautious given that their funds are probably a little bit more precious, Susan?
Susan: Absolutely. I think that men tend to be over-confident and they chase returns despite the evidence. They’re much more likely to invest in areas that don’t have a diversified economy, like mining towns, whereas women are looking for a long-term plan with their ultimate goal to have future security in retirement. Men tend to look at more wanting to supplement their incomes and to retire early.
Kevin: What you’re saying there, really, is that men are risk-takers or more that mentality than women. Do women do their homework more painstakingly than men?
Susan: Yes, they absolutely do. They do a lot more research. They want to be fairly conversant in the language of investment before they seek advice, but they tend to also seek advice. And I think another one of the big differentiators is that women start to do their research and do their homework and realize that it’s good to have a broad-base understanding, but at the end of the day, they’re not the experts, so they’ll seek expert advice.
Men, I have found, when they look at expert advice, they’re actually looking for confirmation of an inherent bias that they already have. Sometimes they’ll speak to someone at a barbecue or in the office and someone will say to them, “Don’t invest in XYZ.”
So, when they seek advice, they’re looking for that to be confirmed as opposed to going, “Maybe I should have a look at the source of that information and listen to what the expert has to say about that,” and then actually judge whether the expert was able to overcome that objection with proper statistics and research.
I think really, where there’s a big difference in women’s success with investment is that they’re looking for that long-term plan but they also listen to the experts and rely on research and data as opposed to hearsay.
Kevin: Given that you’re sitting down talking to investors all the time, both male and female, you must see this bias coming through. You talked there about men wanting the next hotspot whereas the conversation you have with a female investor is probably totally different. They’re asking you different sorts of questions, Susan, are they?
Susan: Yes, exactly. Where I usually start the conversation with my clients is not so much “Where do you want to invest?” but “How much do you have to invest?” Because what we’re really trying to do is match property with their investment goals, and that really starts with what their budget is. Then we look at their appetite for risk and a few other variables like that.
A man will often come with, as I said, these preconceived ideas of “We shouldn’t invest in an apartment in Brisbane,” or “You shouldn’t invest in Perth,” or whatever they’ve already heard, whereas a woman is more likely to say, “This is what I’m looking to achieve,” and that is invariably retirement security: “I have $100,000 saved up, I have a pre-approval of $650,000. Where do I go from here? What’s your recommendation?”
Kevin: I saw some research recently that said that women were able to get into the market quicker and borrow more. Why is that?
Susan: The reason they’ve been able to borrow more is because the lending environment has changed. In the last 12 months, we’ve seen a huge crackdown from APRA and ASIC on investors, so they’re not as willing to lend 90% LVR. They’re not wanting to lend interest-only.
If I look at the group of women who I spoke to 12 months ago who very much typify the research that I’m talking about, the men who are still “um-ing” and “ah-ing” and thinking that they can do their own research and understand what all of the data means have been left behind because the lending criteria has changed, whereas the women who came to me with the research that they knew and then are very willing to hand over their decision to me based on the research that we conduct here at Calla Property, they’ve just gone ahead and done it. They’re already in the market. They’re already investing well.
The lending criteria was looser and there weren’t as many issues with valuations because that was the lay of the land. When everything tightens up, it makes everything so much harder for an investor.
Kevin: Are you saying more women are inquiring through your company, more single women?
Susan: Out of the single groups, there are definitely a lot more women than there are men. A lot of women in my company are between the ages of 35 to 40, and a lot of them come to me and say, “Look, I’m 35, 40, or 45. I didn’t get married. I don’t have kids. I’m now really worried about how I’m going to retire. What can you do for me?”
It’s really heartening to see that with not a massive amount of earnings and not a massive amount of savings, we can get them into the property market and start helping with that financial security.
Of the younger women who are in relationships, they often come to me separately first and say, “I’m in a new relationship and this is all looking good, but I really want to have this locked away for myself.”
Kevin: We’re out of time, unfortunately, Susan. But thank you so much for your time. Susan Farquhar, managing director of Calla Property. That is CallaProperty.com.au. Susan, thank you so much for your time.
Susan: Thanks a lot, Kevin. Bye.