Single ladies, we need to talk. Do you know that one third of single women in Australia will live in income poverty by the age of 60? I know right…
And did you know that owning property plays a major role in the quality of your life in older age and reduces the risk of poverty and homelessness?
Buying property in Australia is expensive. In Sydney it’s outrageous. But that doesn’t mean owning property is an impossible goal, even when you’re on a single income.
In this two-part blog series, I explore the problem of property ownership for women in Australia (part 1) and then set out strategies my clients are using to buy property and secure their financial future (part 2).
Let’s get stuck into Part 1 – Why home ownership matters.
Why home ownership matters
As a broker, I speak with a lot of women about property. Many of you feel you will never be able to own a property in Australia, especially if you’re single.
Women tell me that they’re frustrated and dismayed with the price of property. Some of you are fearful about what will happen when you retire and no longer earning an income that can cover Sydney rents. Many of you have given up on the idea of ever getting into the market.
As you have probably worked out, Government schemes that seek to help first home buyers and single parents into the market are great in theory but often don’t work for inner Sydney markets where property prices exceed the caps these schemes impose.
For example, on the Northern Beaches where I live and work, the price cap limits you to a small two-bedroom apartment (if you’re lucky). This might be ok if you’re on your own, but it’s unlikely to work if you’re a single parent with two or three kids.
It might have been suggested to you from well-meaning family and friends that you move to outer Sydney suburbs where it’s cheaper. Or perhaps that you should pack up your life and head to the regions so that you can access the Government schemes on offer.
But this fails to account for the fact that often your friends, family and support networks are local to you. It fails to recognise that your work – often self-employed businesses – are in the area.
If you’re a woman with children, it also fails to account for the fact that it may disrupt your child’s education. And that it may mean moving your children away from their other parent, which can affect custody and co-parenting arrangements (not to mention the mental well-being of the kids).
The position single women in Australia find themselves in when it comes to property concerns me greatly. Understandably, many of you have given up on the idea of ever owning property. You feel it is simply out of reach. And whilst I totally get it, if you don’t do something to build wealth, you’re putting your future at risk.
Why owning property matters
In Australia, owning property plays a major role in wealth creation. Data from the RBA shows that housing makes up 55.6% of household wealth in Australia (to September 2021). Owning property can help to increase your net worth and total asset base as (in many instances) the asset appreciates over time.
When we have periods of rapid house price growth, property ownership leads to an even greater acceleration of wealth. Take last year for example, when the average home owner in Australia added $130,000 to their net wealth in the 12 months to January 2022. For most people, this would be far greater than any increase in salary.
A woman I was chatting to recently challenged me on this point. She argued that money wasn’t important to her and that she valued other, less material things in life. I completely get where she was coming from. For many of you, ideas of wealth, money, assets and net worth feel like cold aims to pursue.
But when I went on to speak with her about the ideas of security, comfort and quality of life in retirement, the importance of building wealth took on new meaning and significance for her.
Owning property can significantly improve your quality of life in old age. Not only does it reduce your cost of living in retirement (because there is no rent to pay) but it can also serve as a source of money to fund age care in your twilight years. Whilst you may be able to afford rent now, what will you will do when you retire and are no longer earning an income?
Owning property also plays a big role in reducing homelessness and poverty. In fact, when factoring in housing, poverty rates are 42% among renters over 65 in Australia. This compares to 6% of outright homeowners who are classified as living in poverty. And for single women in Australia the picture is bleak – one third of you will live in income poverty by the age of 60.
Increased risk for women
It shouldn’t come as any surprise to learn that women in Australia own less property than men.
Data from the Corelogic Women and Property report for 2022 shows 26.6% of all property in Australia is owned by women compared to 29.9% owned by men and 43.5% owned by men and women jointly.
When it comes to investment property, we women own 29.1%, while men own 36.4%. The rest is owned by men and women together. This disparity amounts to approximately 105,500 additional investment properties owned by men than women in Australia.
The group least likely to own property in Australia are single women – who own 24% of all property in the country. This comes despite the fact women are over-represented in single-adult householders, particularly single parent households.
We also know from the data that men are more likely to own houses (28.5%) compared to women (24%). Why does this matter you ask? Because houses typically experience higher capital growth over time compared to apartments (6.2% per annum for houses in the 10 years to January 22 compared to 4.1% per annum for apartments).
You don’t need to be a brain surgeon to understand why we find ourselves in this position. Women on average earn less than men over our lifetimes thank to factors such as ongoing pay inequality, more of us being employed in lower paying industries, women making up the majority of the part-time workforce and the tendency for us to take career breaks.
The net fallout is that we find it harder to buy property. In fact, the current discrepancy in incomes between men and women means men can save a 20% deposit on the current median dwelling value after 79 months (6.5 years), compared to 91 (7.5 years) months for women.
The fallout is that you miss out on the wealth creation opportunities property presents. Yet again, women are behind the eight-ball when it comes to financial security.
A solution to the problem
There is no magic bullet solution as female ownership of property in Australia is tied up in a much larger, ongoing problem. But there are things you can do to buy property, build wealth and secure your financial future.
Stay tuned for part two of this blog series where I will take a look at some of the strategies women are using to secure property right now.
- CoreLogic Women & Property: One year on. Australia and New Zealand March 2022
- Monash Lens, Monash University. Women, work and the poverty trap: Time for a fair go to support health and wellbeing for Australian women. https://lens.monash.edu/@medicine-health/2022/04/06/1384563/womens-reverse-wealth-trajectory-leads-to-poverty-in-older-age#:~:text=Single%20Australian%20women%20over%2060,less%20than%20%2430%2C000%20a%20year