Housing is the next safe haven

As investors bail out of shares due to the turmoil on world markets, the housing sector is likely to benefit, say economists. The situation is similar to that after the 1987 sharemarket crash, when investors turned to housing as a safe haven for their money, and this could occur again.

With the Reserve Bank unlikely to increase interest rates again in August, mortgage loan holders will not be under such pressure – but the sharemarket is still vulnerable. Westpac's chief economist Bill Evans said that housing is traditionally the “next stop” for investors who pull money out of shares.

However, Mr Evans cautioned home owners and investors not to expect the booming house prices and capital gains of last year. Prices jumped 17 per cent in 2001, he said. As the boom has been long-lived it's unlikely that housing prices will increase beyond 5 per cent this year, according to Mr Evans.