Many property industry participants believe equities will outperform non-residential property as an investment over the next five years, a new survey has revealed.
The survey of property valuers, fund managers, analysts and financiers by the Australian Property Institute reveals deep seated pessimism about the outlook for non-residential property, even compared with the struggling sharemarket.
Asked to look ahead three years from now, 49% of respondents to the survey said they believed it unlikely that non-residential property would be doing better than shares, compared to 36% of respondents in September last year.
By contrast just 32% of respondents believe it likely investors’ non-residential property will come out ahead, down from 45% last year.
Looking five years ahead, most property industry people believe the situation will be slightly improved compared to how it will be in three years. But 40% believe the sharemarket will come out ahead over five years, compared to just 33% who think property will be a better investment.
Survey respondents were also asked what the impact continuing higher interest rates will have on rental yields – 90% said they believe rental yields will rise if the cash interest rate lifts above 8% and stays there for the medium term, perhaps reflecting the squeeze on the supply of new housing higher rates could bring.
Higher rates would have by far the biggest impact on the lower end of the property market, respondents said, while the top end would be likely to escape relatively unscathed.
Most respondents also said the Sydney property market is at the bottom of its property cycle, while the Melbourne and Brisbane markets are at their peak.