Reinventing Homeownership with a $31m Raise
Commonwealth Bank Invests in OwnHome Series A
We’re delighted to share we’ve raised a $31M Series A led by Square Peg Capital with participation from CBA via x15 Ventures. Square Peg have backed world-beating fintechs like Stripe and iconic Australian innovators like Airwallex, Athena and Prospa, and have been searching for opportunities to help catalyse solutions to housing affordability here and abroad. Our existing investors: Global Founders Capital, Entree Capital, AfterWork Ventures and Possible ventures have also joined us again as we build a new path to homeownership and execute on our mission of turning renters into homeowners.
We’re in the middle of a homeownership crisis. Paths to homeownership are moving further out of reach for more and more Australians. Home ownership rates for 25-34 year olds have plummeted from more than 60% in 1980 to less than 40% today. Sydney’s median house price is now $1.5M, and the median house price across all capital cities is now over $1M. The deposit hurdle to homeownership is racing ahead faster than most can save. Longer-term, the wealth gap between renters and homeowners is stark, with those retiring at 65 as a homeowner enjoying wealth 20 times greater than renters the same age.
The deposit hurdle is becoming impossible. Millennials’ proclivity for avocado toast be damned, you would have needed to forgo almost 7,000 serves of avocado toast these last 12 months just to maintain your deposit in the face of exploding home prices in Sydney.
The Bank of Mum and Dad has become the deciding factor. The current market solution to this is shadow financing via reliance on the Bank of Mum and Dad, which has become the 5th largest lender in Australia. The support parents are showing for their children is amazing and incredibly generous. However it also means that the ability for parents to provide this financial support is now the greatest determinant on whether Australians will make the leap from renter to owner. Today, more than 60% of first home buyers rely on direct financial support from their parents. This option is not available to all, further entrenching structural wealth inequality.
OwnHome started with the simple observation that deposit hurdles have become the barrier to homeownership. The median house in Sydney now requires over $350,000 upfront cash for a 20% deposit and stamp duty. With Ownhome, that initial hurdle is 1/10th the upfront cost. On a $1M home, upfront costs with OwnHome are $25,000 vs. $250,000 for a 20% deposit, stamp duty and closing costs.
The OwnHome Path
Capture the upside. The upside of the capital growth in your property: OwnHome customers capture the full capital gains of their home above 3.8%p.a growth. For reference, the previous 70 years in Sydney has seen growth of >8%p.a. If only OwnHome had been available 7 years ago: a customer purchasing the median priced house in Sydney via OwnHome vs. renting and saving at the same rate, would have ended up with an extra $383,000 in equity in their home when they bought their home. $383,000!
Certainty. The typical renter moves every 18 months vs. every 10 years for the average homeowner. Renters are sick of finding that the home they’ve been living in has been sold out from under them. OwnHome customers have a 7 year option and lease to build the deposit toward their purchase of the property they’re living in. As OwnHomer, Shwe, put it;
“In a world where things are changing rapidly, having your own place gives a sense of tranquility”
Make it your own. The freedom to invest in your own home and make it your own. Many of our customers have already started renovations on their OwnHome - new carpets, kitchens, bathroom fittings, you name it! We love seeing our customers invest in the home they’re building their deposit toward. Renters, in contrast, have to ask for permission to hang a picture hook, and quibble over bond refunds on move out.
Today we're building a new path to ownership. but we're not stopping there. Our vision is to redefine the entire home buying and homeownership experience. We're starting with the deposit hurdle but our long term vision is to build the operating system for homeowners to protect, maintain and enjoy their most important asset.
Where else are we leaning in to build the operating system for homeownership?
The world’s best homebuying experience. First: the homebuying experience is broken (to put it mildly). On the one side, you have someone navigating this journey for the very first time. On the other, in what is a very zero-sum battle, you have a seasoned professional whose job day-in–day-out is to agitate against your interests to get the home at the most reasonable price. It’s little wonder that the typical first homebuyer ends up spending 9 months of their life searching, only to end up more than half the time with a home with hidden defects they weren’t aware of.
At OwnHome, we’ve already cut down that search time by 85% for our first cohort of customers, earning back their weekends and their peace of mind. We’ve seen the value of the OwnHome property search and due-diligence platform that allows us to efficiently price and get to the bottom of any potential issues, protecting our customers from buying a lemon. As one customer observed: “I just feel bad for the other person who bought the home unaware of the major defects, without OwnHome’s guidance.” We bring a healthy level of dispassion between our customers and the vendor that helps our customers secure their dream home for the best possible price. In the hottest market on record, in which properties are typically going at least 20% above list, we’ve secured more than 60% of our homes under the price guide - thanks to our ability to move fast, and genuinely walk away on behalf of our customers.
“I just feel bad for the other person who bought the home unaware of the major defects, without OwnHome’s guidance.”
Pull forward feeling and acting as a homeowner. The experience of being a tenant vs. a homeowner is a world apart… and doesn’t need to be. One customer put it best, with OwnHome, you get the benefits of being a renter AND a homeowner. As a renter, you typically have no certainty of how long you can stay, with homes being sold out from under tenants; no participation in the capital growth; and too many restrictions on being able to hang a picture, let alone turn it into your own home. We’re transforming what it means to rent and pulling forward the benefits of homeownership before legal title has transferred.
The best of the tenant experience… broken washing machine? Let us know via the App and it’s taken care of, same day, by a vetted repairman. The homeownership experience is typically full of first-timers reinventing the wheel, but for our customers, they get the benefit of our scale and network, to make homeownership a delight.
Our vision is to continue building a path to homeownership that levels the playing field on the most important financial pillars and levels up on the experiential pillars. Buying a home is one of the most important decisions that most will make in their lives and OwnHome is building the infrastructure to support aspiring homeowners through the entire journey.
With this fundraise, we're excited to...
Continue building the world’s best homebuying experience: The love of our customers is hard-won and we’re just getting started. We’re building Australia’s first scale Buyers’ Agent, and all that goes with that: solving the discoverability problem of listings, fast and accurate property pricing; standardised home purchase terms; an ecosystem of supporting one-click services around move-in and move-out.
Expand into more markets. We’ve recently expanded out of New South Wales with our launch in Queensland, now covering 35% of Australian residential property by value. We know we have our work cut out for us to increase access and make the OwnHome path available to all Australians.
Strengthen our technology. We have built the infrastructure that allows us to deeply understand the financial position of our customers, swiftly determine the value of the homes they're looking to buy, assess their path to a mortgage, and deliver a frictionless home search and home buying journey. We are excited to invest in the OwnHome platform to guide first homeowners on their journey.
We're looking for the best and brightest
We know that solving access to homeownership is an incredibly hard real-world problem. The hardest problems are always atoms, not just ‘bits’ and exist in reality (climate change; food production; housing affordability). We need the best and brightest team across engineering; policy advocacy; customer success, structured finance, and business operations to build the future of homeownership. Does solving access to homeownership and building the future sound like where you want to be? Join us! Check out open roles here.
Today marks a huge step forward for OwnHome, but also the bottom of the Mountain - we couldn’t be more excited for the journey ahead!