Investors tip property over equities

More than half of investors tip property to outperform equities in 2003, with only 9% expecting the opposite result, research from the Association of Investment Trust Companies reveals.

Half of the investors surveyed currently think that investing in property is a better way of saving over the long-term compared to traditional savings and investment accounts.

Of this 52%, one-third believe that the housing market is a far safer place to withstand an economic downturn, 26% believe interest rates will remain low and 24% have little confidence in equities due to their recent performance.

There are significant regional differences in opinion with investors in the South-East and Scotland most likely to tip property to outperform equities in 2003.

The regions where the highest number of investors thought equities would outperform property in 2003 were the South-West with 14% and London with 11%, in comparison to an average of 9%.

Annabel Brodie-Smith, communications director of the AITC, says: “It is surprising investors are so confident that property will continue to outperform in light of the FSA&#39s concern that house price rises may be unsustainable with some valuation measures close to or above the levels recorded before the 1989-92 house price crash.”

Patrick Connolly, associate director of Chartwell Investment Management, says: “Equities look likely to outperform property, mainly due to the latter being arguably overpriced. Equities in comparison look fair value having factored in a lot of the bad news already, from the threat of war with Iraq, through to poor economic growth and generally low sentiment.”

Mark Dampier, head of research at Hargreaves Lansdown, says: “In terms of property, it is hard to get exposure to property with small amounts of money. Most people can&#39t actually afford to buy a second or third house.

“Therefore for the majority of us peasants the simple choice for long-term savings is unit and investment trust savings plans. These are cheap, very flexible and have no contractual term. For property enthusiasts there are one or two property funds in which you could invest monthly.

“However, you need to take a long-term view. It is no good looking at a monthly savings plan after three years, seeing it is worth £1,000 having paid in £1,500, and then cancelling it.”