Over the last ten years, the North of England and Scotland were the clear winners of the property inflation lottery, with Scotland topping the charts with an increase in average property prices from £80,876 in 2002 to £179,446 in 2012. Wales, Yorkshire and London also beat the 72 per cent average increase in UK house prices during the period.
New consumer research undertaken by Hearthstone Investments also reveals that 67 per cent of people in UK do not consider their home to be an investment; however, more than half of those surveyed (51 per cent) think their own property will increase in value over the next five years. 59 per cent are confident that their region will see house price growth and 58 per cent see positive house price changes for the UK as a whole which is in line with the view of many financial advisers.
The popularity of residential buy-to-let is supported by previous Hearthstone research that established that a large majority of people view residential property as a good long-term investment and most (4 to 1) prefer it to equities. However, investing directly in residential property can present numerous challenges, can be time consuming and costly and requires considerable capital investment. For many, regional house price variations are something that can significantly affect their performance compared to their peers in other regions or indeed the UK average.
The TM Hearthstone UK Residential Property Fund manages property geographically across the UK and aims to give stable returns. The returns are based in part on property price changes as well as rental income. Accessible within an ISA or SIPP wrapper from just £1,000 or £50 per month, the fund offers diversity, liquidity for retail investors and tax efficiency that is not available from direct investment.
Christopher Down, CEO of Hearthstone Investments, commented: “The British have a long standing love affair with property but the strength of the market can hide problems in the detail. Traditional investment in residential property requires significant commitment in terms of finances and time and in many cases is limited to a particular region. Even investors with a large buy to let portfolio are often heavily invested and exposed to one specific region.
“Our review of the regional fluctuations over the last five and ten years illustrates that investors are potentially exposed to regional risks if assets are concentrated in only one area. Property prices are recovering from the credit crisis of 2008 but some regions have been affected more.
“A residential property fund can act as a hedge against underperforming areas by enabling investors to benefit from the entire market, without the administrative work, costs and possible void periods involved in running a direct portfolio”.
Loading ...