Property versus shares debate back in the spotlight


A leading real estate group believes more investors will re-enter the property market as volatility in Australia’s share market continues.

Matthew Tiller, LJ Hooker’s national research manager, said the recent share market turmoil will increase the appeal of residential property as a viable investment.

“The current share market instability will have a lot of investors looking for a safer and less volatile investment, and real estate markets will benefit from this,” he said.

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“Over the last quarter, data has shown that investors have been moving away from real estate due to higher interest rates, thanks to additional lending regulations from APRA.

“However, investors will begin to reconsider property, as they will see real estate as the lower-risk and higher-return option.”

Mr Tiller said the return of investors would provide a boost to slowing property markets.

“While this won’t lead to the strong levels of capital growth seen in 2015, it will see prices reach the upper end of forecasts,” he said.

The latest AFG Mortgage Index revealed that investor demand for home loans fell from 40 per cent of total loans processed early in the calendar year to 31 per cent in the December 2015 quarter.

In a two-part series in October last year, following signs of a share market downturn, Smart Property Investment raised the question of whether investors would be wise to prioritise property investment over shares. 

At the time, Ben Kingsley, CEO of Empower Wealth, cautioned investors to avoid interpreting bad news headlines about shares as a sign that they should refocus their investment strategy on property. 

“I wouldn't say it’s an automatic decision, there’s opportunities in the share market just as there are opportunities in the property market, I wouldn’t take a blanket approach and say: ‘Righto, that’s it, there’s volatility in the share market I should move all my eggs into the property basket.’ I think that’s an immature approach to investing,” Mr Kingsley said.

Christopher Bates, independent financial planner and founding director of Canopy Private, indicated that rather than turning their back on shares, investors with well-performing properties in Sydney and Melbourne should be seeing the share market downturn as an opportunity to secure realistically priced stocks.

“Using equity within your property to look at further investing, now’s actually not a bad time to start drip feeding money into the stock market. I would see the stock market falling as an opportunity now to use the equity you've built in the Sydney and Melbourne property market to start to buy in at much more realistic levels,” Mr Bates said. 

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