Australian investors struggling to get into the property market could soon turn to crowdfunding to get around mortgages and auctions.
Property crowdfunding is when investors use digital platforms to invest in the purchase price of property with as little as $1000.
The seller receives the purchase price from the sale of the property ‘shares’ while buyers receive dividends and capital growth relative to their investment.
A new study from the University of South Australia has found crowdfunding could make an appearance in the Australian property market after it has been used in the UK and USA successfully for the last seven years.
Lead researcher at the university Dr Braam Lowies said the concept was new in Australia and would need to be regulated to be successfully introduced.
“At this stage the regulation around property crowdfunding is still a bit of a grey area,” he told the ABC.
“If you buy your crowdfunding share and you want to sell it, there should be a market for you to be able to sell that, because it is a financial instrument.”
“There is no secondary marketplace currently to trade your crowdfunding share in.”
“That is the next step.”
M Lowies told the ABC that property crowdfunding in this country was a realistic option.
“If I look at the rapid growth of crowdfunding as a concept and then real estate crowdfunding within that as a concept, and the global growth which it has shown, I do think there is a very good opportunity for Australia to mimic that growth and for the industry to become a very strong industry,” he said.
“It’s a shopping-at-my-desk world that we are moving towards and why not?”
