How stock market volatility will benefit the property market

Stock market action in recent weeks is encouraging more investors to purchase property, which could significantly change the fortunes of one state's real estate market.

shane kempton

Blogger: Shane Kempton, CEO, Professionals Real Estate Group

Historically, the Western Australian property market has benefited when investors fled the stock market because of global uncertainty.

During the period 1988 to 1990, the median price of a home in Perth nearly doubled following a downturn in the stock market. A similar trend occurred in the mid-1970s when the median price of a home in Perth nearly doubled as a result of falling share prices caused by rising world oil prices and inflation.

Over recent weeks, billions of dollars have been wiped off the value of stocks on just one morning and this is causing fear among mature investors looking to retire in the near future.


These mature investors realise that property is a low risk investment vehicle as many own their homes and appreciate the strong capital growth potential of property.

The reality is that over the long term, the Perth property market is one of the best investments in Australia.

For example, while the Sydney property market is now booming, the reality is that over the past decade the median house price in Perth has risen annually by 7.0 per cent, compared to 3.8 per cent for Sydney.

It is no surprise, therefore, that Professionals has found strong demand for investment properties from baby boomers who are now taking their money out of the stock market and investing it in real estate.

Many of these baby boomer investors are buying properties in lower-priced coastal suburbs such as Heathridge, Beldon, Clarkson, Craigie, Rockingham, Warnbro and Waikiki.

We're finding that baby boomers are driving property sales in lower-priced properties as much as first home buyers.

Population figures show that baby boomers will play a key role in the WA real estate market over the coming decade. ABS figures show that almost a quarter (23 per cent) of Western Australians will be aged 60 and over by 2021, compared to 15 per cent in 2001

Fear is a major emotion that drives investors when the stock market begins to slump and this fear is encouraging a movement by investors back into property.

Property in Perth is still relatively affordable and there is the potential for strong capital growth in selected areas due to major new infrastructure investment.

Overall, the outlook for the Western Australian economy still remains very positive and this will give confidence to investors who are considering investing in the local real estate market during the coming year.


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