That being said, Abley admits Australian residential property has performed very differently to other domestic asset classes, aligning himself here with Ken Atchison, who says the very fact many people don’t consider residential property an investment creates inefficiencies in the market which canny professional investors can exploit. Atchison is encouraged by the fact Rismark has lent almost all of its original $50 million, which proves there is borrower demand for the equity finance model, despite the extra documentation it entails around the origination of the home loan, and if any home improvements are undertaken (homeowners can apply for a credit from Rismark reflecting their efforts to increase the home’s value).

As to why further institutional support has proven elusive to date, Atchison says an investment to back equity release mortgages would “take a huge amount of analysis” for a trustee board in comparison with a traditional commercial property play. He notes that complexity is not exactly flavour of the month among investment committees anywhere. Another slight drawback in comparison to direct ownership of residential property is a hint of “sub-prime syndication risk”, according to Abley, in that the parties valuing the investee houses are not the same as those taking the investment risk. However, Frontier’s Stagg said an advantage of the equity finance model was that it “seemed more like a partnership” between the investor and the homeowner/super fund member, and he hinted that the concept would be revisited in the consultant’s upcoming review of its approach to property.

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