Property '10 times' better than shares

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Despite significant drops in values across Australia, properties have performed 10 times better since Christmas compared to the stock market, according to Residex.

John Edwards, CEO of Residex, said the adjustments seen in the last 10 months were to be expected due to low consumer confidence.

"Housing market growth does reflect consumer confidence. Consumer confidence will have been low in these periods of major adjustment as stock markets leading into these periods were falling fast and there was a significant amount of depressing news from government, which will have fueled apprehension," he said.

"While the adjustments in the values of our homes in comparative historical terms were large, they were many times less than investors were seeing in all other assets. Stock markets had fallen in value by more than 10 times the adjustment seen in the Sydney housing since Christmas 2007."

The median value of houses across Australia has been in decline since July, but that downward trend has started to stall in the last month.

Residex data showed national house values continued to drop over the previous quarter, albeit at a lesser rate, down 0.39%. That was a significant improvement from the quarterly drops recorded in the previous two months, where house values slipped by 0.96% and 1.30% respectively.

"Across Australia on average our housing markets appear to have passed the worst, which on the numbers was June/July," said Edwards.

Units values were down significantly in the October quarter, however, falling 0.69%. In the September and August quarters, unit prices had risen by 0.28% and 1.4% respectively.

One of the best performing sectors of the property market, rentals - where yields are increasing - will likely continue to go up, said Edwards.

"Across Australia, rental prices are rising and will increase further as demand increases in a market where development activity is falling away and immigration remains at a relatively high level," said Edwards. "Growth in rental for the year was again approaching an all-time high and was 12.9%."

 

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