The struggles for younger investors trying to get a foothold in Australia’s property market have been well-documented.
Fintech startup BrickX is one one of the companies looking to provide a solution, offering exposure to residential property through its fractional ownership model.
As part of the model, investors buy and sell “bricks” in a given property through an online marketplace on the company’s website. A further explainer on the details can be found here.
And although the concept is aimed at younger investors on lower incomes, figures provided to Business Insider show that almost half the platform’s users are aged over 35.
BrickX has just chalked up a year in operation and has 30,000 registered users, with around 7,000 actively buying and selling bricks.
The average deposit size is $600, so depending which property you invest in that would allow you to buy anywhere from 4 to 10 bricks. According to BrickX, most investors add to their holdings so the average portfolio size is a bit over $2,000.
Based on those numbers, it’s perhaps not surprising the company’s customer base is geared towards younger demographics. Research earlier this year showed Australian millennials have some of the lowest home-ownership rates in the world, with saving for a deposit cited as the biggest barrier to entry.
This chart from BrickX shows the take-up rates for the investment platform by age group:
Half of BrickX’s customer base are in the millennial age bracket, and of those, BrickX CEO Anthony Millet told Business Insider that around three quarters are first-time investors.
But the data shows older investors are still involved on the platform, and for different reasons.
“For investors aged 35 and over, we’re seeing a number self-managed super funds (SMSFs) use BrickX as a way to gain diversified property exposure,” Millet said. There are also a number of parents investing on behalf of their children.
With additional resources, the older demographics are smaller in number but typically make bigger investments. Here’s BrickX’s breakdown of actual dollars invested by age demographic:
The average figure is calculated by total dollars invested divided by the number investors, while the median figure is simply the mid-point from the data-set for each age demographic.
Those average numbers are skewed by individuals with larger positions, but the median data still reveals a steady climb in investment across age groups.
BrickX investors buy and sell their bricks through an online marketplace on the company’s website.
The operation of a private marketplace requires a certain level of trust from investors, and Millet said the company took the necessary regulatory steps to provide a platform investors could have faith in.
“BrickX was the first business to enter ASIC’s new innovation hub – we found the regulator very open to exploring appropriate solutions for the new types of financial businesses to fit within the current and evolving regulatory framework,” Millet said.
“Beyond being registered with ASIC (which is mandatory to offer a retail product), we have received a number of external accolades and awards which have been helpful in building credibility.”
Millet added that bricks are traded at a relatively high frequency, with a median sale time of around three hours for bricks listed at or below the company’s calculation of fair value.
The value of each brick is derived from the property’s purchase price, adjusted for revaluations that BrickX carries out every six months.
At the time of writing, the company’s website showed that among its 14 active properties, seven had the cheapest brick advertised at a discount to the market price, with five properties trading at market value while two had the cheapest brick advertised at a premium.
As a way to gain diversified property exposure, the concept has so far proved popular. BrickX currently has 10 properties in Sydney, three in Melbourne and one in Adelaide with plans to expand into the Brisbane market.
Millet said the company “is looking to triple its portfolio over the next 12 months”.
“This will include improving density and choice in current markets, as well as launching into new capital cities across Australia.”