Property is favourite investment

INVESTORS remain convinced that returns from property will beat shares despite mounting concern the UK‘s house price bubble is set to burst.

A new study reveals that 46% of adults prefer to invest their money in property rather than stocks and shares or a building society - and that 68% believe property will yield the best return over 25 years.

Research from lender GMAC-RFC found only 6% of Britons would choose to invest their money in stocks and shares and 14% would put their money into a building society.

Jeff Knight, head of marketing services, said there were ?different motives‘ for people investing in property, and the housing market continued to thrive thanks in part to the buy-to-let boom.

?Whatever the reason for property investment, I expect this trend to continue, despite what other commentators might say,‘ he said.

Recent figures from market information firm Datamonitor revealed that the buy-to-let mortgage market had exploded from £3bn to £20bn since 1999.

Demand for property has doubled the value of the average home to £163,000 over the past five years, according to Halifax, the UK‘s largest mortgage lender. However, recent house price studies from property firms Hometrack and Rightmove revealed average house prices had begun falling, while an influential index from Nationwide revealed house prices had risen only 0.1% in August, the smallest monthly rise in nearly three years.

Reccent research from funds analyst Standard & Poor‘s suggested shares have been a better bet over the long-term. A £1,000 investment in FTSE 100 shares in 1984 would have returned £8,626 by June 2004, whereas the same investment in property would have yielded just £4,776 – little more than half.

The worst performer was money left in savings accounts. A £1,000 deposit in a building society would be worth only £2,446 over the same period.

The research also found that despite the popularity of property, most homeowners do not take advantage the benefits of remortgaging, which can save thousands of pounds in mortgage payments. More than three-quarters had not remortgaged over the past five years.

The study also showed that of people taking loans, 31% remortgaged to release equity for home improvements while another 12% used the money to invest in another home.

In the event of receiving an unexpected £15,000 windfall, 46% said they would put the money into property – either their current home or a new one – while 22% would put the money into a savings account, 19% would go on a spending spree and 6% would invest in stocks and shares.

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