THE ERA OF CAR OWNERSHIP COULD BE COMING TO AN END

Maysoon El-Ahmad on April, 2017

WHAT’S GOING ON

The last 18 months has seen evidence that transformational change to one of the world’s largest industry is underway.

It is no secret that car ownership as we know it about to change. Lyft’s president predicts an end to car ownership in US cities by 2025 while according to Henrik Christensen, head of UC San Diego’s Contextual Robotics Institute ‘Kids born today will never get to drive a car’ (poor kids – they can’t have a house either!).

Already, there’s been a noted decline in the percentage of people under 45 who don’t have a license in the US.

Last January, Lyft announced a partnership with General Motors to launch an on-demand network of autonomous vehicles and previously we have discussed Ubers first driverless car pilot in Pittsburgh (which last week was involved in an accident – whoops!).

A tech startup in Helsinki has just launched the first ever transport subscription service through an app aimed at making people ‘ditch their cars’. Called ‘Whim’, the subscription covers all forms of public and private transportation. Based on the destination, the app suggests the optimal route using a mix of transport options ranging from trains, taxis, buses and car rentals. If the user is happy with the proposed trip plan, they approve it which is then automatically paid for allowing the app to act as the ticket. The ambition is to eventually replace owning a car by covering all of a user’s mobility needs.

GROWTH MANTRA’S PREDICTION

• Automobile and technology companies are currently dumping billions of dollars into autonomous technology with the idea that one day, cars will no longer need human drivers.
• While the future of self-driving cars is still far off, we expect to see business model innovations such as ‘Whim’ creating more disruption within the industry.
• With the average vehicle being used only 4% of the time and parked the other 96%, it is no surprise we are starting to see the first sign of the ‘end of car ownership’ movement.
• The end of private car ownership means far fewer cars sitting parked and empty which opens up a new opportunity to redesign our entire urban landscape. We can start to build cities around people to drive connections between communities rather than around vehicles, pavements or parking spots!

COULD SHARED EQUITY BE THE SOLUTION TO HOUSING AFFORDABILITY? 

Maysoon El-Ahmad on April, 2017

WHAT’S GOING ON

Housing affordability has generated much debate among policymakers in the last decade as it continues to be one of Australia’s  biggest concerns.

The future for young Australian’s entering the property market looks particularly grim – and a predicted lifetime of renting has dubbed them “Generation rent’ as they are poised to experience what no generation has before them.

Both Sydney’s house price-to-income ratio (9:8) and the debt-to-income ratio (187%) are global records –  placing Australia in the ‘severely unaffordable’ category based on a global survey on housing affordability.

While policy makers speculate changes in negative gearing and capital gains discounts to help improve affordability, this won’t be enough to help young people gain a foothold in the market.

So is shared ownership / shared equity a  solution?

We are already seeing versions of shared equity models being introduced or proposed by financial institutions and governments in Australia.

The Victorian Government has just announced a new shared equity scheme trial for low-income earners. If homebuyers have a 5 per cent deposit, the government will cover the rest -however they will also own up to 25 percent of the home.

Born out of frustration, the US tech start-up, ‘Point’, recently introduced a new way of achieving home ownership using a shared equity model. Here’s how it works. Point makes a provisional offer to purchase a fraction of your home for a share of your home’s future appreciation.  There are no monthly payments or interest rate, you can buy Point out or sell the home at any time and they lose money if the home depreciates.

GROWTH MANTRA’S PREDICTION

• We don’t believe the housing affordability problem will be easing off anytime soon without the help of some radical changes introduced by policy makers.
• Recent studies have shown that home ownership is 8% higher in suburbs with shared equity schemes. While new shared equity models such as those introduced by the Victorian government is a good start, more will need to be done to have a lasting impact on those who are currently locked out of the market.
• While shared equity models will not be the panacea to the problem, we believe new models of home ownership will be important in helping low-income households and young people gain a foothold in the market. ‘Point’ being a good example of how the issue could be solved.
• With flexibility becoming a growing need and expectation among consumers across all facets of society, we expect to see more innovations offering flexible and alternative options to home ownership in the not too distant future.
• We also think ideas like these are one step closer to developing societal rather than simply economic change – so we hope they work!