Residential property is Australia’s largest asset class ($10Tn), more than 3 times the size of domestic equities. Specifically, while 3% of the asset class is a giant industry called new housing development and the 21% debt on the assets in an enormous industry called mortgage lending, the remaining 76% is Existing Dwelling Residential Equity – a $7.5Tn asset class with NO investment products.
Land appreciates, buildings depreciate. So the performance of residential property is driven by increases in the value of the land underneath the properties. This is what makes Australia one of the most attractive residential equity markets in the world: world-leading population growth (third globally behind only New Zealand and Israel and far ahead of US, China, Europe etc), and the highest urban population concentration (52% of the population live in just 3 centres: Sydney, Melbourne and Southeast Queensland). These drive rapidly rising urban land values and good macroeconomic and regulatory management keep them away from boom/bust cycles.
The unlevered performance of the asset class is solid, but as high-quality properties can be very safe to lend to (over 80% have never lost value), the levered equity returns can be very strong and, on a risk-adjusted basis, outstanding.
Despite this, there are no investment-grade fund managers or fund products providing broad exposure to existing dwelling residential property equity in Australia. Our intent is to fill that gap.
Our first fund offering, the LongView Shared Equity Fund, will focus on supporting deposit-short home buyers through LongView’s YourHome offering.
LongView works with these home buyers by advising them on purchasing the best possible home and co-investing our equity from the fund, to enable them to purchase a better home, sooner. We make our returns when they sell the property with significant capital growth. There are no repayments and no interest along the way.
Our data science team ensures every property will be from high performing segments and our buying field force has helped clients purchase thousands of properties to ensure fit with lifestyle over a sustained period. As a result, the fund makes returns over the long-term in levered equity, hand in hand with the homeowner. It gets the benefits of the homeowners access to high levels of leverage and principal place of residence status while having no debt itself.
The current Australian residential property market doesn’t deliver for lots of people:
LongView is working to transform the Australian property landscape. We’ll do so by making home ownership more accessible and dignifying tenancy, while delivering superior investor returns. We believe that private property investors are the key to promote real change if equipped with our buying expertise, shared equity offerings, responsive property management, and solid residential investment funds.