The volatility of the stock market during recent weeks will encourage more individual investors to purchase real estate in the Perth property market, according to Limnios Property Group Licensee and Managing Director James Limnios. Mr Limnios said the volatility in the stock market was not only unnerving individual investors who bought shares in the stock market but also everyday people who had money in large superannuation funds.
“Many superannuation funds are heavily exposed to the stock market, with the median growth superannuation fund investing 61-80 per cent in growth assets like ASX shares and international stocks,” he said.
“As a result of this overexposure to the stock, many people approaching retirement have seen their life savings in superannuation placed under threat.
“Unfortunately, this volatility in the stock market is likely to continue due to the ongoing trade war between the USA and China and an overall resetting of global tariffs that will inevitably have a negative impact on the world economy and larger global public companies.”
Mr Limnios said, as a result, the Perth real estate market was set to gain added impetus from this ongoing turmoil in the share market as property was seen as a safe haven during times of economic uncertainty.
“Perth is currently the star performer in the Australian property market, and it has also outperformed the Australian stock market over the past 45 years,” he said.
“Since 1980, the median price of a house in Perth has increased in value by 19-fold while the overall value of the stock market has increased by 15-fold.
“In particular, the Perth real estate market should see increased activity from owners of self-managed superannuation funds over the coming year.”
Mr Limnios said there were currently more than 600,000 self-managed superannuation funds in Australia with total combined assets of more than $1 trillion.
“However, residential real estate only accounts for seven per cent of these total assets, and these mum and dad self-managed superannuation funds will increasingly view residential property as a much safer place to invest their money rather than shares,” he said.
“Overall, even though the Perth real estate market has achieved significant price growth over the past four years, it still has the capacity for further growth that will prove attractive to investors.
“There are still prime opportunities for investors to achieve high rates of capital growth and rental yields in prime areas of the Perth real estate market, especially by investing in new low-density housing developments in the innercity area where there is still a chronic lack of housing.”
Mr Limnios said he had witnessed over many years and for varying reasons.
“Over time, property has been a safe bet,” he said. “Banks would not give you an 80 per cent loan if they saw housing as a risk.”
THE PERTH REAL ESTATE MARKET SHOULD SEE INCREASED ACTIVITY FROM OWNERS OF SELF-MANAGED SUPERANNUATION FUNDS OVER THE COMING YEAR.
James Limnios is the managing director of Limnios Property Group
