The sub-prime housing loans collapse in the US triggered the global financial crisis / File
AUSTRALIAN investors are being asked to pump millions of dollars into high-risk US houses, the same assets that triggered the global financial crisis.
In the first listed investment of its type, financial planner Dixon Advisory is seeking $80 million from mum-and-dad investors to purchase the heavily discounted homes.
House prices in the US have suffered a five-year slump and remain up to 60 per cent below their 2006 peak.
The collapse in US house values led to millions of people walking away from their homes, which under US law left the banks and other lenders with responsibility for their clients’ debts.
It was this avalanche of mortgage defaults that started the world-wide collapse of the wholesale financial system and triggered the global crisis.
According to Dixon Advisory, it plans to buy up homes in the New York metropolitan area, particularly family homes in Hudson County and New Jersey.
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The pool of houses is expected to produce an annual return of more than 8 per cent, based on estimated rental income. However, the company has not detailed the forecast return it will pass through to investors or its fees.
Dixon Advisory’s directors include high-profile financial advisers Daryl Dixon and Max Walsh. The plan will be marketed to individual investors and self-managed superannuation funds.
“Valuations for US property in certain areas, with strong fundamentals such as the New York metropolitan area, have become very attractive,” Dixon managing director Alan Dixon said yesterday.
“At the same time, housing affordability measures in the US are at record highs and rents have been mostly stable throughout the period, resulting in very attractive yields to investors currently.
“This, coupled with the record high Australian dollar, provides a unique investment opportunity for investors to gain access to this highly attractive asset class.”
The property fund plans to issue units at $1.60 each, compared with a net asset value of $1.57, with a minimum subscription per person of $2000.
Dale Gilham, analyst at fund manager Wealth Within, said there were benefits and risks associated with the US housing market. The benefits include potential capital gains, if prices recover, and higher than normal rental income.
The risks include currency exchange and growth forecasts that assume the US economy is improving.
Mr Gilham said he was wary, as the investment “has not been tried and tested over years”.