Sharan Burrow, the head of the world’s biggest trade union organisation, says asset managers and superannuation funds should find ways to invest in Australia’s residential housing market through shared-equity arrangements with fund members.
Burrow called for the superannuation industry to push for regulatory change to allow investment in housing, saying the industry has ignored both a potential source of returns and a key interest of its members, whether young or old.
“In regards to shared equity in the housing environment, I have a personal passion about this, and I have never understood the reluctance of the industry around this,” Burrow, who is the general secretary of the International Trade Union Confederation, says.
Shared-equity arrangements could provide a potential solution to the housing affordability crisis facing younger members, as well as help address the gap in post-retirement products for older members looking for financial security, according to Burrow.
“Results are proven at the entry point for, particularly younger buyers, but anybody looking to buy into a market with a capacity to either turn over the house or buy it out as their career flourishes,” she says.
“At the other end of the market where reverse mortgages are a total rip off, shared investment or equity is actually a very secure option for retirees looking to divest themselves of some of their equity but in very valuable property.”
The industry has largely ignored the investment potential of residential property, says Burrow.
“If you look at reputable analysis, like that done by ANZ or other analysts who can show you the returns over the medium term, it has never made sense that the industry and the asset managers have been so skittishly shy about this,” she says.
Burrow thinks that regulatory impediments are not an insurmountable barrier to the industry better integrating the superannuation system with, what is for many working people, their biggest financial asset, their home.
“Of course, you need to get the regulatory environment right, but that is a matter of analysis and problem solving through dialogue with government and the appropriate industry sector,” she says.
“That is not about saying we are going to ignore one whole area of investment, which is, by the way, critical to the owners of the capital that the industry is itself investing.”