41% of investors still believe in residential property
A survey by Invesco Perpetual shows 41% of investors still believe that residential property will yield the best investment returns this year.
Industry caution on housing market has not filtered through to investors says Invesco Perpetual
The research, conducted by YouGov on behalf of Invesco Perpetual shows that, in spite of industry warnings of a house price downfall and extensive media coverage on the issue, sentiment for property investment returns has in actual fact increased fractionally from this time last year, when 40% of investors thought residential property was most likely to yield investment returns.
Furthermore, 195 of investors polled believe that UK Equities are most likely to yield the best investment returns after property, followed by fixed income at 13%. Only 2% of investors have any confidence in US equities for out-performance.
Neil Woodford, head of investment at Invesco Perpetual and fund manager of the £1,631.53m income fund says: "Whilst residential property has undoubtedly been a good investment over the past few years, it is extremely dangerous to project these returns into the future. Relative to equities, and in absolute terms, the valuation of residential property now looks extremely stretched. I believe that there will be a downward correction in the housing market over the next two to three years.
"In spite of the weaker economic outlook, I am still finding many attractive valuations in the UK equity market and remain confident that my strategy will be one which will continue to make money for my investors in this environment."
Investors who relied on residential property for investment returns in 2004 would have seen on average returns of 12.6% this is compared to the average stock market return of 12.8% over the past 12 months. Investors in the Invesco Perpetual income fund would have benefited from returns of 22.10%, over the same period. Over the last five years the fund has returned 61.89%.
source: mortgage strategy