Property remains the asset of choice in times of political uncertainty
Alpa Bhakta (pictured), chief executive of Butterfield Mortgages Limited (BML)
There are an abundance of predictions circulating regarding what 2020 has in store.
In truth, as the dust only just begins to settle on the General Election, and with Brexit still looming on the horizon, we are still seeking answers to many of the same questions we had at the start of the year.
For investors, ongoing political and economic uncertainty as a result of delays caused by Brexit has made it incredibly difficult to commit to significant financial decisions.
With a view to understanding just how Brexit uncertainty is impacting investors’ financial portfolios, Butterfield Mortgages Limited (BML) recently commissioned new and independent research.
Of the 1,100 UK-based investors BML surveyed, all with investments in excess of £10,000, a majority (53%) hold assets in property.
The UK is a nation of homebuyers, with governments of all stripes historically aiming to encourage homeownership―long before former Prime Minister David Cameron’s Help to Buy scheme was introduced―so it’s little wonder why so many people strive to jump onto the property ladder.
What is most interesting, however, is how one fifth of investors BML surveyed aim to increase their share of property in 2020.
This is significant, and clearly shows there is pent-up demand for bricks and mortar.
Indeed, 61% of those we surveyed said that traditional assets like property are best positioned to deliver stable and secure returns, indicating that property may be the asset of choice for those trying to manage political uncertainty.
So, how does property compare to other asset classes?
Take cryptocurrencies for example.
What has been billed as the high-growth asset of tomorrow actually commands a relatively small market share, with only 17% of investors saying that cryptocurrencies formed part of their financial portfolios.
A majority of those surveyed (64%) also do not consider it to be a safe or reliable investment.
More concerning for that sector, as many as 10% of those who have invested in cryptocurrencies plan to reduce the amount they hold in that asset in the New Year.
With a Conservative majority government now in power, it is important that they act promptly to reinvigorate a dampened property market.
This is necessary for many reasons—not least, to combat the housing crisis.
Thankfully, there remains large untapped demand in the sector, with BML’s survey revealing that 42% of investors are holding off making any major investment decisions until Brexit has been resolved.
Moreover, the fact the asset is highly regarded may help further embed it as the UK’s top choice investment class, as shown in BML’s recent research.
For this reason, there is a sense that once Brexit is resolved and there is greater clarity concerning the direction of the UK, more investors will have the confidence to act on their property investment intentions.