Does Turbulence In The World’s Stock Markets Influence Our Local Property Markets?
It’s a good and an often-asked question and right now the answer appears to be no.
The real estate markets in our world have started 2016 exactly as they finished off in 2015, buoyant, optimistic and very busy.
The reason when you go looking for data to explain the disconnected nature of the two markets seems to sit in reports done by the Australian Bureau of Statistics.
In essence Australians hold only around 3% of their wealth in shares and 60% in property. We love property and it has made many Australians very wealthy and right now because bank interest is so low and the stock market looks so uncertain, more and more people are choosing to park their wealth in property in our part of the world. For the record a further 14% of Australians wealth is placed in superannuation funds (some of which is also in property) and 4% in bank deposits.
In addition to our historical predisposition to invest in bricks and mortar the real estate markets in our region are being boosted right now by the increase in rental yields because of diminishing supply in permanent rental stock.
Factors like strong growth of AIRBNB have meant that many more properties are being let short-term now when compared to just a few years ago.
There has also been little construction of rental accommodation in the last two decades. Put simply all these factors are putting pressure on the supply of rental properties therefore resulting in higher rents and bigger yields…a classic case of “supply and demand”.
What does this all mean? 2016 looks like being another strong year for property in our region.
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