Should Investors Look at UK Property Instead of Shares?

by Mark Johnston

Should Investors Look at UK Property Instead of Shares?

Current news suggests that the outlook for property has improved across the country.

Research reveals that house prices are rising once again across the whole of the UK and therefore we may be seeing a little more than just the ubiquitous green shoots in the property market.

house crash 2Trevor Greetham, director of asset allocation at Fidelity, said: “In a reversion to pre-bubble form, the UK looks set to enjoy a housing led recovery.”

In the latest Lloyds TSB Private Banking Investor Confidence Index the property sector has had the most positive results.

In April the positive sentiment for property stood at just 8 per cent, leaving it the fifth highest asset class, behind gold, emerging market shares, commodities and UK shares.

Ashish Misra of Lloyds TSB Private Banking, states that “house builders have performed well in the stock market recently, mainly as a result of government programmes to boost house sales.”

In the latest Lloyds TSB Private Banking Investor Confidence Index the property sector has had the most positive results.

In April the positive sentiment for property stood at just 8 per cent, leaving it the fifth highest asset class, behind gold, emerging market shares, commodities and UK shares.

Ashish Misra of Lloyds TSB Private Banking, states that “house builders have performed well in the stock market recently, mainly as a result of government programmes to boost house sales.”

Therefore some 44 per cent of investors think the outlook for property is positive in the next six months, so it would seems that many of these investors are now looking in to bricks and mortar.

Research has revealed that lots of people thought they were geniuses back in 1999, when the FTSE 100, the share index of 100 companies listed on the London stock exchange, hit an all time high and you could double your money overnight in the right tech stock. However, a couple of stock market crashes sorted that out.

Some industry experts state that if a potential investor was to invest  £50,000 in to shares and the stock market doubles, they would have £100,000 and have made £50,000. Although if the same potential investor was to invest £50,000 in to a £200,000 house and the price doubles, the house would be worth £400,000 and they would have made £200,000, after backing out the mortgage.

All this said many other experts say that all property investment must come with a large health warning that prices can go down as well as up.

Therefore, Jonathan Hopper, of property search consultants Garrington, warns investors that “the property market is in a much healthier state, and initiatives like Funding for Lending have played a key role. But the market is not out of the woods yet.”

Alan Smith, chief executive of Capital Asset Management, reckons the track record of shares is better than property: “Over the long term, shares have tended to outperform property (when dividends have been reinvested) but of course that outperformance comes with additional levels of inherent volatility.”

In conclusion then most financial experts believe that when it comes to cash or shares, the answer is have a bit of both.



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