Property outlook defies doomsayers
Property is still a better buy than bonds but not as good as shares, according to analysts. AMP's Shane Oliver says property has benefited from low interest rates and been a haven from volatile stock markets. But rising vacancy rates, record house prices, stable rents and low rental yields are taking the lustre off somewhat.
Mr Oliver says the main risks to property are global growth suddenly rising leading to higher interest rates, which would add to household debt levels in Australia. Or, conversely, a sharp downturn in the global economy which would lead to a collapse in Australian exports causing property to fall. Residential property owners would be hurt the most.
Mr Oliver also says that listed property trusts are overvalued relative to direct property and vulnerable, though not dramatically, to a rise in bond yields. He prefers listed and unlisted property to bonds, but shares over the next six-12 months.