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!
BY MICHAEL YARDNEY
While the average annual capital growth of Adelaide and Sydney apartments trailed the sharemarket’s per annum gain of 7.7 per cent – at 7.1 per cent and 7.4 per cent respectively – Melbourne unit prices rose by an average of 8.9 per cent between September 1980 and September 2010.
Oliver Hume’s research, published in the Sydney Morning Herald, also points out the stability of property prices compared to the equities market, with the 2007-2008 collapse of the stock market at the height of the global financial crisis (GFC) highlighting the solidity 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."
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.
And of course the study hasn’t really taken into account the leverage one gets through property which vastly inflates the return on your dollars invested.
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!
Michael Yardney is the director of Metropole Property Investment Strategists, a best-selling author and one of Australia’s leading experts in wealth creation through property. Subscribe to his e-magazine at www.propertyupdate.com.au. For more information about Michael visit www.metropole.com.au.