reporter2
04-01-13, 15:20
http://www.straitstimes.com/premium/money/story/shares-aced-property-last-10-years-20130104
Shares aced property in last 10 years
STI gained 9.3% annually against 6.3% for URA's property price index
Published on Jan 04, 2013
By Anita Gabriel Senior Correspondent
THE red-hot property market tends to get the bigger headlines but shares have trumped real estate in terms of average annualised returns over the past 10 years.
The Straits Times Index (STI) generated an annualised gain of 9.3 per cent a year between 2002 to the end of 2012, according to the Singapore Exchange's investor education portal My Gateway.
Over the same period, property returned an annualised 6.3 per cent. This is based on the Urban Redevelopment Authority's latest quarterly flash estimates for the property price index.
The STI's returns do not take into account dividends while net rental income is not included in calculating property returns.
If dividends are included, the STI's annualised gain over the period shot up to 12.2 per cent.
But comparing home prices to shares over a shorter time frame may draw varying outcomes.
A case in point. Over a five-year period, home values based on the price index turned in an annualised return of 4.4 per cent compared to the STI's 1.75 per cent.
Similarly, gains in the property index outpaced the STI over a three-year period.
As far as 2012 goes, the stock market was a clear winner. A vibrant merger and acquisition scene, abundant liquidity and the countless strong yield plays on the SGX allowed the STI to notch up a stellar year.
The 30-stock benchmark index gained over 20 per cent while private residential property prices chalked up a meagre 2.8 per cent rise.
"The STI did not have to contend with six rounds of cooling measures!" said Chesterton Suntec International's research head, Mr Colin Tan.
Despite the measures - the most recent was announced in October last year - property prices and transaction volumes remain strong.
Credit Suisse expects overall property prices to remain flattish this year, supported by low vacancy rates and strong household balance sheets.
The research firms said the risk of more cooling measures remains if prices keep shooting north.
Maybank Kim Eng's regional head of research and economics, Mr P.K. Basu, contends that now may be time for the property-centric Singaporean investor to switch focus to stocks.
"What is striking is that the dividend yields for the broad stock market are substantially better than rental yields from property," he said.
Yet typical investors are more focused on property than on equities.
"That should change soon. Equities are clearly better," added Mr Basu.
[email protected]
Shares aced property in last 10 years
STI gained 9.3% annually against 6.3% for URA's property price index
Published on Jan 04, 2013
By Anita Gabriel Senior Correspondent
THE red-hot property market tends to get the bigger headlines but shares have trumped real estate in terms of average annualised returns over the past 10 years.
The Straits Times Index (STI) generated an annualised gain of 9.3 per cent a year between 2002 to the end of 2012, according to the Singapore Exchange's investor education portal My Gateway.
Over the same period, property returned an annualised 6.3 per cent. This is based on the Urban Redevelopment Authority's latest quarterly flash estimates for the property price index.
The STI's returns do not take into account dividends while net rental income is not included in calculating property returns.
If dividends are included, the STI's annualised gain over the period shot up to 12.2 per cent.
But comparing home prices to shares over a shorter time frame may draw varying outcomes.
A case in point. Over a five-year period, home values based on the price index turned in an annualised return of 4.4 per cent compared to the STI's 1.75 per cent.
Similarly, gains in the property index outpaced the STI over a three-year period.
As far as 2012 goes, the stock market was a clear winner. A vibrant merger and acquisition scene, abundant liquidity and the countless strong yield plays on the SGX allowed the STI to notch up a stellar year.
The 30-stock benchmark index gained over 20 per cent while private residential property prices chalked up a meagre 2.8 per cent rise.
"The STI did not have to contend with six rounds of cooling measures!" said Chesterton Suntec International's research head, Mr Colin Tan.
Despite the measures - the most recent was announced in October last year - property prices and transaction volumes remain strong.
Credit Suisse expects overall property prices to remain flattish this year, supported by low vacancy rates and strong household balance sheets.
The research firms said the risk of more cooling measures remains if prices keep shooting north.
Maybank Kim Eng's regional head of research and economics, Mr P.K. Basu, contends that now may be time for the property-centric Singaporean investor to switch focus to stocks.
"What is striking is that the dividend yields for the broad stock market are substantially better than rental yields from property," he said.
Yet typical investors are more focused on property than on equities.
"That should change soon. Equities are clearly better," added Mr Basu.
[email protected]