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Shares and bonds bound for chaos

AT SOME stage in the near future, the shivers will degenerate to nervousness and then to chaos on the share and bond markets.

This was the warning issued by many of Perth’s investment analysts and reiterated by Raine & Horne WA managing director Rick Mazza.

Share owners will tire of living with volatility and it is at this point of the economic cycle that residential and commercial “bricks and mortar” will increasingly be viewed for what they are and have always been – a secure, stable, generally unexciting, long-term investment, Mr Mazza said.

“The last few years have seen greater volumes of money than ever before flowing into all sectors of property and it has been a case in many instances of too much money chasing far too few opportunities,” he said.

“The many new avenues available for small and large investors to enter the property market in relatively recent years through property trusts and syndicates has accentuated this pressure.

“Yet this situation can only be expected to increase as money begins to flow from stocks and shares.

“Buoyed by this increasing tide of liquidity, I see the commercial investment market pushing higher with the maximum pressure being in the under $10 million range,” Mr Mazza said.

“The vigorous pace of sectors of our commercial and residential markets in the last three years will be maintained due to the sheer weight of money.

“The market will continue to be fuelled by many positive factors, including lower unemployment, rising household income, a low interest and low inflation regime and availability of finance.

One of the most important influences on the Australian property market is immigration, he said.

“Any increase has a positive effect on property values,” Mr Mazza said.

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