Australian’s Prefer Real Estate Investment over Shares, RBA report

March 26 2014
Pen, coins, and a graph

Australian’s prefer real estate investment over shares, RBA report

Perth, Australia- Interest in real estate investment, including property development and investing, has become more favourable with Australian households, new RBA data suggests.

In a report released Wednesday, the Reserve Bank of Australia, investigating the current state of the Australian financial system, said households were more interested in property investment than equities. The data shows real estate investment moving into territory not seen since the boom of the early 2000’s.

With interest rates low, savings deposits are falling out of favour with many Australian households. The popularity of property has boomed since the end of the Global Financial Crisis, while less Australian’s were confident in equities as an investment. Australian’s are also putting aside more money to pay-down debt than previous decades, however, this trend has cooled in the last few years, as the doom and gloom of the GFC years fades.

The report also concludes that talk of financial risk to the economy from rising house prices is unfounded, however the market will continue to be monitored.

“The pick-up in investor activity in the housing market does not appear to pose near-term risks to financial stability, developments will continue to be monitored closely for signs of excessive speculation and riskier lending practices.” the RBA said.

“Alongside the increase in housing demand, there is some evidence to suggest that the continued low interest rate environment is encouraging a broader increase in households’ appetite for risk. According to survey data, the share of households that are of the view that paying down debt is the ‘wisest’ use of their savings has fallen significantly since late 2011.”

“Similarly, the share favouring deposits remains well below its 2012 peak. At the same time, and consistent with the increase in investor activity in the housing market, the share of households favouring real estate has risen to a level approaching that of the early 2000’s property market boom,” the report said.

The RBA released this chart, citing the Melbourne Institute and Westpac.

Chart: Australian household investment preferences over time.

Chart: Australian household investment preferences over time.

A popular investment option for Australian’s is property development. If you own a block of land, you might want to consider property development as a sound investment option.

House-Behind-House, Duplex, Triplex and unit development are popular investment solutions – Ventura iD in Perth are the property development specialists.

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