We’ve written before about our lack of institution or company-owned residential real estate. Across Australia 30% of us live in rented accommodation and Mum and Dad investors own most of this housing. Despite 9% of our workforce’s wages going to superannuation, cash that has to find a home, the big funds have never been attracted to residential property.
Westpac looked set to change all that in 2006, buying a whole bunch of housing in anticipation of launching our first residential property trust. But this week they’ve announced they’re selling up. It’s almost 500 properties, all leased to the Defence Housing Authority. Not like they’ve had any vacancy.
Even with an incentive plan, the National Rental Affordability Scheme, put in place by Federal Labor (one of their 2007 election ideas,) the big end of town has proven disinterested in residential housing. Too low a return? Too risky? That’s not what history shows.
Westpac says they’re abandoning their plans for a funds management portfolio because the market has changed and “the strategy is no longer appropriate.” Who knows what that means.
Either way it puts more pressure on average Australians to invest in residential property.