Property sector closely monitors US Federal Reserve moves

Along with the highly anticipated rate rise by the US Federal Reserve this week, any sign of the pace of hikes to come will be closely monitored by the property sector.

While the end of the long bond rally was already in sight last year – and quickly priced in as property stocks took a tumble – more recent indications that the US Fed will tighten money faster could send fresh jitters through the real estate investment trusts.

Yields stocks, including listed property and infrastructure, act as better-returning bond proxies. As the price of global debt rises, forcing up bond yields, the appeal of property stocks diminish. That shift puts invested capital at risk as values drop in the property sector, according to Morningstar’s Tony Sherlock.

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