Investors in the share market are turning towards property, due to increasing instability in stocks, according to new research.
More than a quarter of existing home owners are currently looking to buy either an investment or holiday property, found LJ Hooker Finance.
This result comes after a downturn was seen in the profitability of the share market, that traditionally drew Australians into investing, said LJ Hooker’s deputy chairman, L. Janusz Hooker.
While Australians are typically the highest shareholders per capita, this has begun to see a change, Mr Hooker said.
“However the multiple double-digit losses experienced by the share market in 2011 are driving a stronger interest in property investment. Data shows that over a 10 year period, property investment yields a higher after-tax return than shares^. Uncertainty in the share market is drawing Australians back to traditional investment options to ensure long-term results,” he said.
“Residential property is a traditional favourite amongst Australian investors due to the long-term stability of the market, potential capital gains or opportunity to boost income through regular rent.”
However, he warned, investors need to make sure they do their due diligence and don’t get carried away.
“Investors tend to get excited about the idea of capital gains but forget to factor in additional expenses, taxes and how they will manage an additional mortgage,” said Mr Hooker.
The survey was conducted by Galaxy Research and involved 1017 participants aged 18 to 64 who are currently active in the property market.