Get real with real estate

It often amuses me how much attention is given to the share market with even tiny changes measures and analysed every day.

In fact, several times a day, newspapers, websites and broadcasts report the merest movement of the share index.

Despite this media fixation, in Australia it is residential property that really underpins our wealth.

Across the country, residential real estate is valued at more that $5.5 trillion. That’s three times the value of listed shares in this country ($1.6 trillion) and about the same comparison with our superannuation savings ($1.8 trillion).

Before you start thinking that must include commercial property, think again. All those skyscrapers, office parks, shops, warehouses and factories added together barely nudge $0.7 trillion, a mere eighth the size of residential assets, according to the latest estimates*.

That’s why it’s heartening to see such strong and consistent demand for good residential real estate investments.

Despite shares being the show pony of the investment world, it’s good old home-grown real estate that is the true base of Australian family wealth.

Property clearly stacks up against shares on almost every investment criteria.

Like the constant share market darling, property is a ‘staple’ too. It’s an asset that has to be purchased, such as food and clothing, regardless of economic conditions.

Property is also heavily under supplied, so there are always more takers than homes for sale or rent – and will be for decades to come.

Property not only provides strong capital gain but is a generous dividend payer in the form of regular monthly rental income.

Where is the wealth in this country? In real estate.

Until next week,

Jock Bing

(*Source RP Data)