18 Sep Why a ‘man is not a plan’ – Ken Morrison
Now more than ever women are finding a love of investing in property to secure their independence and financial future. Ken Morrison from the Property Council of Australia tells us about this groundswell of women proving that a ‘man is not a plan’.
Kevin: Interesting to note in a blog article that I read on Your Investment Property’s website, an increasing number of women making up for what they lack in superannuation by investing in properties. This is according to analysis of data from the Australian Taxation Office by the Property Council of Australia.
Ken Morrison, who is my next guest, is quoted in that article inside Your Investment Property magazine, and Ken joins me to talk about that.
Ken, thank you for your time. Welcome to the show.
Ken: My pleasure, Ken.
Kevin: Interesting to note these figures. Let’s walk through a few of these. Nearly half – 47% – of Australians who own investment property are women. Did that surprise you, Ken?
Ken: Yes, it is surprising because as we all know, on average, women earn less than men, so you would have thought their ability to invest in property might be lower. But in fact, we’re not seeing that. We’re seeing women taking a conscious decision to invest in property despite that wage disparity.
We think they’re doing that because they’re looking to the end of their working life and realizing that they’re not going to end up with the same superannuation nest eggs as their male counterparts, so they need to actively build wealth for the future, and they’re using property to begin doing that.
Kevin: We’re seeing a lot of young women, too, before they even consider getting married, looking at investing in property. Would it be fair to say, Ken, that because of some of the constraints you just talked about and a few others will talk about, they could actually be starting behind the eight ball a little bit?
Ken: No doubt that’s the case. If you’re on average earning less than someone… And we know that women do that. There’s a pay inequity issue that seems to be hardwired into workplaces, which is tough to do something about and is, unfortunately, still persisting. So, you have that issue.
You also have women far more likely than men to take time out of their work lives to look after families, and women are more likely than men to be working part time rather than full time. You put all of that together and over a working life, they’re going to be earning considerably less.
But here we see women, despite that, making an active decision to invest in property, and that can only be because they’re looking to the future and they’re saying “A man is not a plan. I need to have my own financial plan and to be building wealth and using property as part of that.”
Kevin: I read a quote somewhere – it was only fairly recently – that men outnumbered women almost two-thirds in terms of investors, but that certainly seems to be changing.
It raises another question, too. If it’s difficult for women because of the pay structure, I wonder how difficult it is for them when it comes to borrowing, going to the bank. How do the banks look at them, Ken?
Ken: Again, you can see that will depend on their circumstance. But if you have an individual, a woman, who is earning less than their male counterpart, then they’re going to be able to borrow less than their male counterpart would be. That might also impact their decisions.
What we’re seeing in society is because particularly in Sydney and Melbourne, where house prices have really gone through the roof, more people are choosing to invest as their first step on the property ladder rather than going straight into an owner-occupied property.
That might allow them to purchase a place where they don’t have to work. They don’t have to be proximate to their location. It might be a different city where prices are cheaper and what they’re intending to do is to trade that investment property into an owner-occupied property, perhaps when they’re forming a family.
We’re seeing that with males and females, but if your ability to access a mortgage off the base of a lower income means that you’ll also be facing some of these limitations when it comes to the property market as well.
Kevin: Ken, do you have a feel for how many women are actually negatively geared compared to men?
Ken: Yes. It’s pretty similar to investment properties, so it’s 55% of negative gearers are male. It’s around 45% who are females, so just under half, as you said. Interestingly, when you look at those with salaries below $80,000, 55% of negative gearers below $80,000 are women and 45% are men, so it reverses.
It bears out what I’m saying. You would expect if you’re earning less that you would have less capacity to actually be investing in a residential property. In fact, what we’re seeing is women who are more likely to be earning less than men are actually taking an active decision to get out there and try to build their financial security through property.
It’s quite dramatic when you have 55% of those people who are negative gearing who are male, but when you look at below $80,000, that’s reversed, so it’s only 45%. There is definitely something going on for women who are really charting a course, who are deciding that they really have to build their own financial security, feel limited in the way they’re able to do that, and do see property investment as an avenue for that security.
Kevin: Very interesting. Ken, I appreciate you spending some time with us to bring us up to date on this as well. Ken Morrison is the Chief Executive of the Property Council of Australia.
Ken, thanks so much for your time.
Ken: My pleasure, Kevin.