Technology is coming to the rescue of making properties more affordable in Australia especially for first home buyers. Greg Dickason from Core Logic tells us about sofi.com.
Kevin: “Housing affordability” are two words probably on the lips of most people right now – people talking about “How can we make our houses more affordable for Australian property purchasers?” Joining me now to talk about this, Greg Dickason from CoreLogic.
Greg, what sort of products are coming out now that deal with affordability, and what can we do about this?
Greg: Kevin, I think there are quite a few coming out, especially in the fintech space – and “fintech” stands for “financial technology.” There are a lot of start-ups around the country and from the U.S. that are coming in that are looking at new ways in which they can use financial products that make houses more affordable for us.
Some of those are looking at things like when you’re downsizing, do you need to sell your whole house or can you sell parts of it and rent it back and allow your new starters or first-home buyers to buy a portion of your house, for example? Others are looking at as a first-home buyer, are there new ways in which I can get into the market ready to buy a unit or a house or portions of a house?
There are lots of different technologies coming out there, especially ones that are also looking at credit and how they can actually look at your credit and novel ways in which they can score you as a borrower.
Kevin: Could you give me some examples of some of these sites that we can have a look at?
Greg: Absolutely. One of the sites from the U.S. looks at your academic record, Kevin, and from the back of your academic record, they will lend to you. This is before you even have a credit history. That enables people coming out of university, for example, to get credit early and potentially to buy into the housing market very early.
Kevin: Greg, what’s the name of the website?
Greg: Kevin, it’s called SoFi, which stands for Social Finance – that’s SoFi.com. It’s really interesting because they have started to really understand their market, which is students or people who have just graduated, and they have lent to them and worked out that they’re much lower credit risks than you’d otherwise think. They’ve started with personal loans but they’ve moved into mortgages. You can expect them to come to Australia soon. They have a large amount of capital to do that.
Kevin: This I imagine will be a great boost for first-time buyers and particularly students.
Greg: Absolutely. If you think about it, you may be a hard working student who’s achieved very well but you’re still very much starting out in life. So for somebody like SoFi to come along and say, “Hey, work with us. We’ll lend you money because we trust that your work ethic is going to mean you’re going to be successful in life.” That’s a great start.
Kevin: Watch out for it. It’s called SoFi.com.
Just while I have you there too, Greg, I’ve quite often heard about the number of bedrooms that are available around Australia or vacant. Is that an opportunity for us to maybe take up some of this accommodation and make it a little bit more affordable?
Greg: I think that it is, Kevin, and I think that’s where the sharing economy with things like Airbnb but other newer technology platforms are going to make a real difference. There are 27 million bedrooms in Australia, so considering there are 24 million Australians, that means there are three million more bedrooms than there are Australians in our country, never mind the fact that some people share a bedroom. That really opens up do we have a supply problem or do we just have an allocation problem?
Kevin: I did see a recent survey, and we mentioned it in the show, too. A Trip Advisor survey showed that 67% of travelers plan to stay in a vacation rental in 2016, and this is largely on the back of things like Airbnb. It certainly is a growing industry, isn’t it?
Greg: It is. And if you look further than that, there are 7 million garages, and if we ever get to the point where cars are self-driving and they don’t need to park at home and they just go out and earn you money when you’re not using them, what are we going to do with our 7 million garages?
Kevin: It’s interesting you say that because I also had a talk to someone else out of the States who was telling me that now it’s quite common for them also to lease out driveways – accommodation places for cars. So we’re seeing a lot more of this happen, this community sharing and this opportunity to earn a bit of extra income as well, Greg.
Greg: Yes, exactly. It’s pretty exciting, and I think it may be some of the ways we answer our first-home buyer supply problems in our country.
Greg Dickason from CoreLogic. Thank you so much for your time.
Greg: Thanks, Kevin.