ADVISERS BULLISH ABOUT RESIDENTIAL PROPERTY
- Nine out of ten IFAs expect UK house prices to increase during the next three years
- 40% of IFAs would increase their own personal exposure to residential if it were easier to do so in a tax-efficient way
- 42% of IFA clients also more interested in residential property
- Castle Trust sees record inflows into its Housas which track or beat the Halifax House Price Index
New researchfrom Castle Trust, which offers investment products that track or beat the Halifax House Price Index, reveals that nine out of ten (86.4%) IFAs expect UK house prices to increase during the next 3 years and four out of ten (40.4%) would increase their personal exposure to the asset class if it was easier to do so in a tax-efficient manner. This increased appetite is mirrored in the demands of their clients, with 42% more IFA clients showing an interest in residential property as an investment.
The new survey with 104 financial advisers reveals that between now and 2019; 86% of advisers expect house prices to rise – with one in 20 anticipating a dramatic increase. When looking at the next 10 years, only 6% expect prices to fall and one in 14 think they will rise by over 50%. By 2024, financial advisers on average think that house prices will increase by around 21%, which would add £37,773 to the value of a typical home.
The research reveals that over 40% of IFA clients want to increase their investment in residential property. According to the survey, the most common barriers to investing in a buy to let property are:
- Getting a deposit together (49%),
- Worries about tenants or lack of tenants (51%) and
- Hassle (41%).
Sean Oldfield, Chief Executive of Castle Trust said: “It is clear that confidence in the entire UK housing market is finally taking hold and is no longer just confined to London & the South East. This is starkly apparent from our own results – we have witnessed record flows into our Housa products, presumably because their returns are tightly pegged to the Halifax House Price Index. Our Housa products provide a simple alternative to buy to Let which has never before existed – which opens up the chance for more people to invest in residential property who previously weren’t able to do so.
Investors across Castle Trust’s range of Housas have seen impressive growth since they were first launched in October 2012. The company’s unique Protected Housa investment product which protects the capital invested and tracks the Halifax House Price Index (HHPI), has delivered capital growth of 3.1% in its first month alone.
Housas are a low cost and tax-efficient way to get exposure to the housing market. Unlike property funds, there are no upfront or ongoing management fees. Housas typically qualify for inclusion as an ISA, Junior ISA or SIPP with a minimum investment of just £1,000. Investors are eligible for protection by the Financial Services Compensation Scheme of up to £50,000 per individual.
UK residential property is one of the most stable asset classes. Analysis by Castle Trust reveals that over the last 30 years, it has historically delivered annual returns of about 6% per annum – which is comparable with equities, and superior to commercial property, but with much less volatility than both.