Women outperform men in property investing but specific strategies are crucial

Women have been shown to outperform their male counterparts in the subtle art of property investment but an uneven playing field means they have to adopt specific strategies and overcome some career obstacles.

Smiling young female investor sitting at her workplace with house model and calculator.
The budget sets aside $482 million to improve women’s workforce participation and earning capabilities.. (Image source: Shutterstock.com)

Women’s financial independence has been in the news a lot recently.

The Australian Government has just announced a $2.1 billion budget package that over six years focuses on women’s safety, economic security and health and wellbeing.

Gone are the usual political advertising images of blokey tradies in hard hats selling the government’s message.

In its place is an insistence on gender equality, childcare access and improved female workforce participation rates.

Property is widely regarded as the most compelling means to achieving financial security, but comparatively little attention has been paid to the challenges confronting women in building a property portfolio to achieve financial independence.

Glass ceiling for mums

A new Treasury analysis reveals the high price women pay for becoming a mum.

Australian mums on average sacrifice 55 per cent of their income in the first five years of becoming a mother. Treasury characterised this as a “motherhood penalty”.

While men’s and women’s earnings appear to track along in lockstep until the baby comes, their respective earnings diverge markedly after motherhood. Men’s earnings remain unaffected by their entry into parenthood.

If women leave it to their late 30s to enter the young parent phase of their lives, they need to be resigned to the fact they won't be financially capable of investing in real estate until much later in life.

One of the challenges of starting to invest in the 20s or 30s age range is the absence of enough working time to save the large deposit needed to enter the property market.

The best option for women at that age may be looking at rentvesting as a solution to getting a foot onto the property ladder.

Rentvesting remains a viable option because property prices in markets such as Perth and Adelaide are significantly lower than those in the eastern capitals of Sydney, Melbourne and Brisbane.

Lower property prices allow rentvestors to get their foot onto the property ladder in an affordable and financially conservative way.

Women investors outperforming men

Whether an experienced property investor, a homeowner or simply someone doing due diligence on the state of the real estate market, everyone is affected by the Reserve Bank of Australia’s recent interest rate hikes.

While 2022 has seen the most rapid rise in interest rates seen in 20 years, triggering higher repayments on existing loans, it does represent an opportunity for savvy investors to pick out bargains and review their property portfolio strategy to take advantage of current market conditions.

Interestingly, while women make up just under half of all Australians who invest in property, they seem to consistently do a better job of it compared to their male counterparts.

According to Australian Taxation Office data, female property investors managed to outperform their male counterparts by a whopping 40 basis points during 2016 and have been outperforming them ever since over the past decade.

Research shows women tend to be more cautious in framing their investment strategy. They devote significantly more time to researching the market and typically look for properties with lower risk.

Women also have a clear preference for long-term investments and higher yielding opportunities, while also sourcing properties in conservatively priced capital city locations that offer value-add propositions.

Closing the participation gap

More flexible working conditions could combat the pernicious motherhood penalty, as women who enjoy greater access to flexible conditions before having children are more likely to remain employed.

Analysis suggests a need for updating workplace settings, particularly factors impacting the availability of flexibility, which could potentially mitigate the direct motherhood penalty in employment and hours worked.

However, these changes may potentially erode hourly wages.

Research highlights the fact that motherhood disproportionately leads women into more flexible, lower-paid workplaces. Mothers are also less likely to be in management roles.

More effective job design would benefit not only women but also those men seeking greater flexibility at their workplaces.

Australia’s obsession with disproportionately rewarding long hours in some industry sectors heightens the existing gender pay gaps that could be corrected by introducing more considered workplace norms and policies.

Hope abounds

The just-released budget sets aside $482 million towards women’s economic security (over six years from 2021-22), to provide greater choice and flexibility to improve women’s workforce participation, increase their earnings and progress their careers.

According to Treasury, changing social and workplace attitudes together with a supportive policy environment could result in substantial progress in dealing with Australia’s sizeable motherhood penalty.

They pointed to the pressing need to remove existing barriers created by out-of-date social norms, not fit-for-purpose workplace practices, and obsolete talent retention policies, together with government policy settings.

Having the ability to invest throughout one’s lifetime and when income is sufficient for loan finance is paramount to achieving the goal of financial independence.

When it comes to women’s finances, maximising the utilisation of women’s skills would increase society’s return on investment from its unused female human capital.

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