Housing in Australia as a portfolio investment
International Journal of Housing Markets and Analysis
ISSN: 1753-8270
Article publication date: 21 November 2008
Abstract
Purpose
The purpose of this paper is to examine the effectiveness of housing as a property investment vehicle. In this analysis, the performance and diversification benefits of housing over 1996‐2007 are investigated.
Design/methodology/approach
Sharpe and Sortino ratios were employed to assess the risk‐adjusted performance of housing and major financial and real estate assets. Correlation analysis was also employed to examine the portfolio diversification benefits of housing.
Findings
The study found that housing is an effective property investment vehicle in which it delivers the highest risk‐adjusted returns and reveals negative correlation with major assets. The enhancement of these attractive features is also evident in recent years.
Research limitations/implications
This study has implications for investor who seek to include housing as part of their portfolio. The analysis and results are limited by the quality of the data.
Originality/value
This study is one of the few studies in housing investment, particularly the housing market in Australia. Additionally, this study is probably the first attempt to assess the downside risk of housing.
Keywords
Citation
Lin Lee, C. (2008), "Housing in Australia as a portfolio investment", International Journal of Housing Markets and Analysis, Vol. 1 No. 4, pp. 352-361. https://doi.org/10.1108/17538270810908641
Publisher
:Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited