You are here: Home - News -

Faith in property grows as investors lose confidence in equity markets

by:
  • 15/02/2002
  • 0
More people will use buy to let to replace pensions, says Mintel survey

People are increasingly turning their backs on traditional pensions in favour of property investment to fund their retirement, according to new research.

The value of the buy-to-let mortgage market rose 126% between 1999 and 2001, reports market analyst Mintel. Its survey found 46% of people consider property a safer bet than equities, with 42% saying they would consider investing in it. As a result, Mintel forecasts an increased use of buy to let to fund retirement.

However, Mark Smitheringale, head of corporate communications at Skipton Building Society, is wary of banking pensions on property.

‘People have to be very careful about using this type of investment as a pension,’ he said. ‘While it is clearly attractive at the moment, if there were a major downturn in the housing market people would find themselves in a difficult position. It would be more reasonable if it were used to supplement other pension arrangements.’

The Mintel report says that low interest rates, rising house prices offering capital appreciation and increasing demand for rental properties are an attractive incentive. However, it also notes that long term house price increases tend to lag behind the FTSE 100 and although rents have doubled in a decade, overall yields have been falling.

But John Heron, managing director of Paragon, believes yields are not the only benefit of buy to let and gearing needs to be taken into account.

He said: ‘The returns from buy to let consist of rental yield and capital appreciation and a mortgage allows you to gear up the return relative to the capital invested. It is this that makes the buy-to-let sector attractive. People invest in property because they perceive it as a more stable and reliable investment than equities. It is true they are judging that over the relatively short term, but it is not surprising people make choices with reference to what they see today.’


Tags

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
LMS launches new service to help clients buy abroad

Legal Marketing Services (LMS) has launched a European mortgage service intended to make the process...

Close