On August 8, the China Banking Insurance Regulatory Commission said that from now on, it will expand the old-age housing reverse mortgage pension insurance to the whole country, and further deepen the structural reform of the supply of commercial old-age insurance to meet the differentiation of the elderly. Diversified needs for old-age security. The move is intended to complement China's traditional old-age approach to innovative financial products. Old-age housing reverse mortgage endowment insurance, that is, "housing endowment insurance", will be expanded from the current pilot to the country-wide development, the community of this hot discussion.
"it is better to raise children against old age than to provide for the elderly by housing." people raise houses when they are young, and homes are raising people when they are old. "whether in China or Australia, the concept of" providing for the elderly with a house "has become more and more accepted by more and more people. The current housing reverse mortgage pension insurance in China is a form of housing pension. In addition to reverse mortgage, "old-age by house" also includes the form of housing rental, sale or rental replacement, with the aim of achieving the mutual conversion between housing assets and current assets, and optimizing the allocation of assets over the course of a lifetime. Maximize effectiveness.
Before the policy tightens, people will choose to go to Australia to buy "housing for the elderly" in the hope of getting double the domestic rental income and more stable appreciation expectations, thereby improving the quality of life in their later years. But is it true? Does it really work in Australia? What are the pitfalls and hidden worries behind this?
First, the current situation of Aussie "providing for the aged by House"
Let's take a look at the proportion of Australians who own housing. About 30 percent of Australians own their homes and 29 percent have mortgages, according to data. About 31 percent rent on a regular basis and 8 percent rent for free, but do not own the property.
In Australia, by age, 55 percent of people over the age of 50 own homes, while 43 percent of middle-aged people have mortgage loans, and most young people (43 percent) are currently renting.
In terms of net worth, Australian homeowners have an average of A $ four hundred and forty two thousand in net worth. Men average A $ four hundred and fifty five thousand in net housing, while women average A $ four hundred and twenty seven thousand. People over the age of 50 have a net home worth of about A $ five hundred and sixty two thousand nine hundred and ninety nine, compared with just A $ two hundred and forty eight thousand for young Australians. High-income groups own more than A $ five hundred and twenty one thousand, while the lowest-income group owns just A $ three hundred and twenty seven thousand.
It is interesting to note that, with the exception of the highest income group, the net worth of housing owned by other income groups is roughly the same.
Second, "old-age by house" has become a myth.
In the popular suburbs of Sydney and Melbourne, the A $2 million real estate portfolio produced a weekly return of less than A $752 after deducting fees, an income lower than the poverty line for retired couples, according to the analysis.
This is based on a study by chartered accountant and consultant William Buck, whose analysis is based on the benchmark rent for a single-family villa or two apartments, and deducts the regular cost of investing in real estate. He also assumes that there are no mortgages and that real estate investments do not occupy the self-managed pension fund (SMSF). The analysis does not take into account other expensive capital expenditures, such as replacement of carpets or ovens.
"for many investors, it is natural that they concentrate their investments on real estate and want to make substantial gains from capital growth," he said. But they didn't take into account some risk factors, "said Scott Girdlestone, director of wealth consulting at William Buck.
In Australia, a retired couple living on the poverty line earns $852 a week.
By contrast, conservative portfolio index funds that track Australia's stock and bond markets can generate twice as much revenue a year, outperforming Sydney and Melbourne in terms of both yield and price performance.
The chart below shows the current yield and capital growth performance of conservative portfolios over the past 15 years.
If an average of A $2 million is allocated to the Bloomberg AusBond (Bloomberg Australian Bond Index) and the S / P / ASX All Ordinaries (index best represents the Australian stock market), at current interest rates, an annual yield of more than A $85500 can be generated.
William Buck's study found that the same A $2 million invested in a house portfolio of one villa or two apartments generates net income as low as A $30000 a year.
Watch out for liquidity traps
Morgan Stanley, an investment bank, warned of potential liquidity traps in low-yield real estate portfolios if owners spent large sums of cash on home maintenance or self-use.
"even if retirees have some liquidity in addition to real estate, their investment proceeds will be slowly depleted, which means that real estate capital growth needs to make up for that capital consumption."
Investment Bank Morgan Stanley researcher said, "in recent years, the number of households with multiple investment homes has been increasing. In Australia, about 1.5 million households now own an investment home, up about 2% year-on-year. "about 384000 households own two investment homes (up about 3 percent) and 18000 own five (an increase of about 7 percent)."
Andrew Peters, managing director of wealth management firm Semaphore Private, says some people are still living in the fantasy of a property bubble, believing that the capital boom of the past 20 years will continue. Peters' client base is mainly from Melbourne, he says. The total income is usually about 3%, and it makes sense to deduct about 1% from the rent of day-to-day expenses, regardless of mortgages. If house prices do not rise, real estate investment can only keep pace with inflation. However, additional maintenance costs, such as renovation, garden maintenance and painting, will drain these funds (capital added). "
At the end of June, the average annual increase in residential rents across the country was about 1.8 percent, lower than the inflation rate (2.1 percent), according to CoreLogic data.
Third, the loss of "providing old-age with housing"
Martin North, head of consultancy Digital Finance Analytics, said Melbourne's net rent yield (excluding mortgage costs, maintenance costs and revenue from tax breaks) was negative, while Sydney's net rent yield was well below Sydney's inflation rate. Research shows that half of Australia's real estate investments are losing money.
William Buck's previous analysis assumes that the real estate portfolio does not involve mortgages, so the situation is even more serious for those who have recently bought homes and are under pressure to repay their mortgages. Coupled with falling house prices, people forced to sell their homes face high transaction costs and market risks if they fail to repay their loans.
According to an analysis by online comparison website RateCity, a person who bought a mid-priced property in Sydney during the boom in 2017 could face a loss of up to A $194000 if sold in a subsequent decline. Or more than 18% of the price at the time of purchase. Similarly, a Melbourne owner could lose as much as A $152000.
As house prices continued to fall, plus the cost of stamp duty and mortgage insurance, some people began to have negative equity at the end of 2017, so the bank demanded that Sydney's interest-paying borrowers pay down 5 percent of their A $1.03 million worth of property.
Chris Foster Ramsay, head of Foster Ramsay Finance, the mortgage lender, said: "in a balanced portfolio, real estate has always been a very important component, providing long-term capital growth. Especially those who want to survive the cyclical short-term market downturn. But for those who want to raise retirement income by selling properties, they need to recalculate total transaction costs, including marketing costs and capital gains tax, which could account for about 5 percent of the price of a home. "
"Real estate is a wealth-accumulating investment, and don't expect it to provide you with the income you need to retire." "right now, putting income into pension funds or investing in a liquid, diversified portfolio may be a better option," said Andrew Peters, managing director of wealth management firm Semaphore Private.
Fourth, how to provide for the old-age by housing, Australians are very confused
In fact, most Australians are not sure or reluctant to use housing to finance their retirement lives.
More than eight out of 10 Australians are uncertain or reluctant to sell their homes to support retirement, according to data.
Despite a broad consensus between men and women, there are still some notable differences in income intentions and marital status. More than 1 / 2 (55 percent) of Australians earning less than A $50, 000 are not sure what to do with their homes after retirement, while about 1 / 3 of those earning more than A $75,000 are unsure. At the same time, married couples are the most difficult to determine the population, they are also the most likely to retain housing.
Recently, a comedy film "the richest person in Xihong City" has become a hot topic of discussion, although the overall evaluation of the film is mixed. But it reflects many of the current social realities and human nature behind the joke has been widely accepted by the public. In order to pass the test and inherit 30 billion of the legacy, Wang Duoyu, the protagonist of the film, is racking his brains out of a billion dollars in a month. Behind the seemingly nonsense storyline is the perception of wealth.
In Australia, most people think they can become "rich Australians" when their annual income is about A $100, 000 and their retirement savings and investments reach A $ eight hundred and seventeen thousand nine hundred and ninety nine.
Lara Bourguignon, a treasurer at the National Bank of Australia, said one of the main reasons why people will not have an sense of security for future retirement is a lack of financial planning. Nearly 3/4 of interviewees said they lacked a financial plan and did not know how to "provide old-age with a house".
In today's real life, wealth is often linked to personal ideals. To achieve and achieve a certain purpose, most of the time it has to be related to money. With the concept of old-age change, people need to explore more old-age models, "housing-based pension" is just one of them. For individuals, whether they want to be rich or well-off, they need to learn more about how to preserve and add value to their wealth. As far as government is concerned, more efforts should be made on how to realize the innovation of old-age products and the perfection of the structure of the old-age system.
The writer: cultural scene Shelley