Could investment fashions create property bargains?

 
Could investment fashions create property bargains? (D Andrews for Adfero)

A new survey has indicated that property is losing favour against other assets as an investment option. 

The Rathbone Investment Management poll of 1,000 UK investors and 500 high net worth individuals found that the majority of the high net worth group no longer favour property as an investment, with this mood being caused mainly by recent changes to the tax system that have reduced returns.

In particular, the three per cent second home stamp duty surcharge and the phasing out of mortgage interest relief on buy-to-let by 2020 have somewhat altered the landscape.

Not surprisingly, this mood is reflected in the investment and divestment decisions being taken; 25 per cent of high net worth investors own buy-to-let properties, but only seven per cent plan to increase their portfolios. 

However, the views of the 1,000 investors about property were not quite so downbeat, with only 38 per cent saying they believe it is no longer a good investment. 

That means plenty will still regard bricks and mortar as a good way to invest, and it may be that widespread divestment in a bear market could lead to there being a lot of bargains on offer for those who do want to increase their portfolios. 

Rathbone noted that the sentiments expressed in the survey are not unusual, pointing to the National Landlords' Association survey published in January that showed 20 per cent of its members planned to sell a property this year. 

Robert Szechenyi, investment director at Rathbones, noted that investors have "taken a step back" to ask whether property is still the best bet in a changed fiscal climate. 

He advised: “Investors who are looking to invest in property, should make sure to assess their risk appetite, look at all alternative options and make sure this property is held within a well-diversified portfolio of investments."