Surely, someone asked me the other day, if all investors are hunting for yield on their investments, share and property assets will become overpriced, causing another plunge in asset prices.

There’s no denying this possibility, not least because asset prices have often fluctuated and will most likely continue to oscillate in value, plunging sharply in value at times and becoming overvalued at other times.  At present, there’s a fear of a residential property boom following the steep rise in prices due to historically low interest rates.

The Reserve Bank, with its warning to investors that house prices can fall as well as rise, is clearly concerned about an unsustainable bubble, especially if the high dollar forces it to reduce the already-low cash rate even further.  Given that there’s still a shortage in supply in several key areas, the end of the housing boom could be some time off.

As with the share market, the risks for property investors are increasing but compared with the share market, the yields are lower and the transaction costs are higher.  A new entrant to property investments needs to understand the risks involved  particularly in the apartment market where many new projects will be finished within the next two years.

The future movement of share prices will be less affected by an increase in the supply of listed companies and more by the movement of company profits and dividend payouts.  A special reason for my confidence in good returns for share investors this year is the distinct possibility that the company tax rate will fall by 1.5 per cent to 28.5 per cent next financial year.

If this occurs, franking credits which presently refund company tax at a 30% rate to shareholders will become less valuable refunding tax at 28.5%.  All the leading companies are aware of this possibility and several are already increasing their dividends or planning special dividends to pass on to shareholders the maximum value of their franking credits.

In this environment, the odds are very high that 2014-15 will be a year of increased dividend payouts and this will underpin the strength of the market.  After that, the prospects for share prices will be less certain with the market depending on earnings growth to boost prices.

In summary, while the hunt for yield has definitely boosted share prices, failing a major increase in interest rates, the prospects for share investors remain good. This doesn’t mean, however, that prices won’t fall at some future date and all investors need to be aware of this risk and be prepared to sit out any downturns.

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Daryl Dixon is the executive chairman of Dixon Advisory