Why I am launching First Rung

How do the millennial generation get on the First Rung of the property ladder in the 21st century?

My story started two years ago; I have two daughters (aged 15 & 18); a regular part of our dinner conversation with my kids often turned to the question – “how are we ever going to afford our own home, Dad?” 

What do you say to that question? Get a good education, find a well-paying job and save hard? The numbers don't add up.

It was very different when I bought my first home. When my wife and I bought our house in Sydney – the price was 4x average joint income.

In parts of Australia it’s now 16x and growing! 

When I was looking for my first property, houses were considered a home, a place to raise your family, but now it’s turned into an investment asset class, where speculation is rampant and prices have gone through the roof.

Housing used to be an affordable utility, and it used to be important that home ownership was encouraged as the glue that held us together, no matter what our cultural, religious or ethnic background was. That’s all changed. 

Australia has let the ‘negative gearing’ system run riot: – a system created and designed in an era of high and volatile interest rates, and when property prices were stable, has been left static in an era of falling interest rates and booming prices. 

We have created a three tiered property class system – renters, those that own, and those who own property portfolios as an investment. This "housing class system" has driven the wealth gap from a crevice to a canyon, and disenfranchised many young Australians in the process.

Never, in Australian history, has so much wealth been created by so few (the investment property owners) to the detriment of the generation that follows.

The problem is real, and politicians are ignoring the social and economic consequences and problems created by rapidly declining home ownership.

The fall in home ownership among millennials is now a crisis.

This crisis will soon make it’s way into politics – if politicians don’t address this issue, they will pay a price at the ballot box in future elections.

I believe there will be a new political movement, in Australia, and across the OECD nations, to address home ownership – I predict that a new movement will be born out of the frustrations of both sides of politics as 20% of the voting population (i.e. the millennials) fight to get their voice heard. The older generation is ignoring the younger generation’s home ownership aspirations. 

This will be a huge movement, and there will be consequences for political parties that don’t start to pay attention to the plight of this large and powerful voting demographic.

So, what’s the solution? And, is there a role for private sector innovation?

I thought long and hard about what I could do to help my kids and other millennials get onto the property ladder. My initial decision was to enter politics and try and change the system from the inside; so I ran for a Senate position with Senator’s Xenophon’s NXT Party (I was the Lead Senate Candidate for NSW). After campaigning all over NSW, and listening to the voters, I was surprised by just how many people thought this was one of the most critical issues facing the nation. A few months in, it was obvious that changing the system from the inside was not going to work in any reasonable timeframe (so many politicians own multiple investment properties!), and this problem needed to be solved another way if I was going to help not just my daughters, but all millennials.

This is where market based, private sector innovation can offer solutions.

I have worked for companies like Standard Chartered Bank and Macquarie Bank (*) in the past, and during the last four years I have been working in the FinTech sector, I have come to the realisation that there is a huge opportunity to create a market based solution that helps solve this growing problem of 'first home affordability'. 

While researching the market it became very obvious that traditional banks and financial services businesses weren’t doing anything but re-branding and repackaging old products. There has been little innovation in banking products, and exchange listed organisations are more focused on the next quarterly results, and paying dividends to shareholders, than developing innovative services that solve real world issues.

This is when the idea for First Rung was born.

What my children, and other millennials need, is a way to ‘turbo charge’ their savings so they can get their home deposit together much faster. I knew I needed an experienced co-founder, so I approached long-time friend and colleague, Mark Elliott, who had start-up experience, to help me bring the idea to market. We set to work immediately building out the team, the platform and a set of investors that shared our vision. 

After months of hard work, we have built a service and a fintech business that will revolutionize the industry – we have created a mobile first, globally scalable, savings and investment service to help millennials save for the deposit on their first home – it’s called First Rung. We want to help get people onto the 'first rung' of the property ladder.

Through my children, their friends and many other supporters, we have road tested this vision with hundreds of millennials, and we’re now getting ready to launch the business next year, in Q2 2017. 

For me, it is incredibly rewarding to be doing something that helps my kids get ahead in this complex and competitive world. And my kids face the same problem as all the other millennials in the world - getting that deposit together to buy their first home; and First Rung will help them. 

Exciting times ahead!

(Note * = actually Macquarie Communications Infrastructure Group, MCIG, an ASX listed investment fund owned by Macquarie Bank Group)