Research reveals equities investment is not as safe as houses

It will come as no surprise to property punters that recent research from Oliver Hume has revealed the Melbourne apartment and townhouse market has outperformed shares as an investment over the past thirty years. I certainly wasn’t surprised by the data!

While the average annual capital growth of Adelaide and Sydney apartments trailed the sharemarket’s per annum gain of 7.7% – at 7.1% and 7.4% respectively – Melbourne unit prices rose by an average 8.9% between September 1980 and September 2010.

Oliver Hume’s research, published in the Sydney Morning Herald, also points out the consistency of property compared to the equities market, with the 2007-08 collapse of the stock market at the height of the global financial crisis highlighting the steady gains that can be expected from real estate over the long term.

When comparing the S&P/ASX 200 Index and median unit prices from the Real Estate Institute of Australia, they found that the sharemarket actually outperformed units until September 2007, when the GFC struck.

National general manager of research with Oliver Hume Andrew Perkins says of the research, “It just shows that the set-and-forget nature of property can provide less-spectacular returns but it also highlights the volatile nature of the ASX.”

While property and equities values have intersected at various points in time, particularly during the 1982 recession, at the end of 1980 the value of equities plummeted as property prices surged.

Perkins says that a unit bought for $50,000 in 1980 was now worth about $450,000, but this price growth did not take into account further investment returns provided by property through things like depreciation and rental income.

While some people have made millions from shares, the evidence is clear – for the average Australian looking to build wealth in a stable and consistent way, there is nothing quite as safe as houses!

Source: Sydney Morning Herald


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