Is residential property the best investment? What does ANZ bank say?

The ANZ Property Outlook - January 2008 produces the following statements and graphs.  "In raw terms, since 1984, residential property has enjoyed an extraordinary compound annual total return of 13.4%, only slightly below that of equities (13.8%) and far above both commercial property (10.3%) and bonds (9.4%)." 



"But in risk-adjusted terms, residential property has delivered vastly superior returns to all other asset classes.  ... In risk-adjusted terms since 1984, residential property returns have more than tripled those of equities and more than doubled those of commercial property and government bonds."



"A dramatic tightening of the housing market will force already soaring house prices and rents sharply higher." 
Housing market balance






So where should the astute investor be looking?
Herron Todd White (HTW) is the largest independent property valuation and advisory group in Australia, with over 400 staff across 40 offices.  They are independent because they only conduct valuations - they neither sell nor develop property.  HTW's February 2008 "This Month in Review" consists of a 43 page report assessing the position of each residential region in the property cycle, ranging from:
1. Bottom of market
2. Start of recovery
3. Rising market
4. Peak of market
5. Declining market
Investors aim to purchase in phases 2 (start of recovery) and 3 (rising market).  HTW's view is that Perth is at the peak, but select parts of the Eastern seaboard are in phases 2 (start of recovery) and 3 (rising market).  As indicated in previous FCC Bulletins, we believe that certain parts of Sydney (in particular) and also parts of south east Queensland, provide very good investment opportunities.
The fact that Sydney is well behind the rest of Australia, and is due for a catch up, is evident from the following ANZ chart
 


As ANZ says, "Our projections suggest a critical and rapidly expanding shortage of housing in Sydney will provide significant support to house prices and rents".  This is based on a number of factors including "the vacancy rate falling to a 19 year low of 1.4% in September" and "NSW home building approvals have slumped to lowest level on record".
If you have interest in acquiring residential investment property with yield around 5% and strong prospects of good capital growth (or referring such property for your clients) please feel free to contact us for some excellent opportunities.