Arnold
Tash Jayasinghe
CibbuanoA New Boom for the Real Estate Market?
June 8th 2006 01:00
Take a look at the history books and it appears that the Australian share market and the real estate market are intrinsically linked. Typically when one is up, the other is down. In recent years, the Australia share market has been a profitable enterprise for Australian investors. The returns of stocks have far outweighed the yields provided by the property market so naturally, stocks are where the average Australian has invested their spare cash. During the boom time of the share market, analysts have advised that investors place their money in shares rather than property.
Currently the shares market is enjoying a sizeable resources sector boom. Traders are split between forecasts. The sector has shown signs of slowing and the pessimists believe the ride for resource investors is nearing an end. The optimists believe there is still a bit of wind in the sails. Eitherway, its quickly becoming a shaky time for the share market and there is talk of a bubble bursting in the near future. Some investment analysts are starting to suggest Australians look offshore to protect their investments. It appears the share market is starting to be considered overvalued compared to local and global standards. Australia has definitely enjoyed a strong economy over the last decade and its prominence on the world stage has increased.
With all this talk of a slowing in the sharemarket, I’m thinking it is only a matter of time before investors start loosing their confidence in the sustainability of the Australian sharemarket and start shifting investments towards offshore opportunities or the safe haven of the local real estate market. As share market volatility increases, investors start looking to safer options to protect their assets. The share market can be a fickle investment arena. People flock when times are good and returns are high. It only takes a small dip for investors to become reactionary and start pulling out of downward stocks. This occurs because shares have a very short time to settle. They can be purchase and sold within a short period of time. This means that before an inexperienced share investor can make a rational decision about a local dip in the market, they’ve acted on a protectionists urge. The other reason why the share market tends to be volatile is that opinion and actions are self perpetuating. One major shareholder pulls out and suddenly all the punters start thinking bad times are on the horizon. Often without thorough analysis, investors will start selling stocks simply because a substantial shareholder has pulled from their investments in the company.
Anyhow, enough bitching about the shares market, tomorrow its time to get into the property market nitty gritty...
With all this talk of a slowing in the sharemarket, I’m thinking it is only a matter of time before investors start loosing their confidence in the sustainability of the Australian sharemarket and start shifting investments towards offshore opportunities or the safe haven of the local real estate market. As share market volatility increases, investors start looking to safer options to protect their assets. The share market can be a fickle investment arena. People flock when times are good and returns are high. It only takes a small dip for investors to become reactionary and start pulling out of downward stocks. This occurs because shares have a very short time to settle. They can be purchase and sold within a short period of time. This means that before an inexperienced share investor can make a rational decision about a local dip in the market, they’ve acted on a protectionists urge. The other reason why the share market tends to be volatile is that opinion and actions are self perpetuating. One major shareholder pulls out and suddenly all the punters start thinking bad times are on the horizon. Often without thorough analysis, investors will start selling stocks simply because a substantial shareholder has pulled from their investments in the company.
Anyhow, enough bitching about the shares market, tomorrow its time to get into the property market nitty gritty...
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