Close to four in ten current Sipp investors would look to use their Sipp for property purchase, following new pension rules post A-Day, research indicates.
Hargreaves Lansdown says with the current Sipp market consisting of about 140,000 contracts, this would result in 51,800 Sipp property purchases and would boost the UK housing market by 5%.
The investment broker calculates the 51,800 property purchases valued at an average of £195,000, would increase property demand by £10bn.
The research also finds 85% of respondents intend to buy property in mainland UK. And eight in ten Sipp property investors plan to invest in a buy-to-let, while 42% will invest in a holiday home, with 14% intending to put their main residence into a Sipp.
Spain, along with France are seen as the most popular overseas destinations for investment, however Hargreaves Lansdown says the breadth of interest suggests the demand may be more robust than previously anticipated, with countries including Israel, Turkey, Croatia, Pakistan and South Africa also attracting interest.
Moreover, of those respondents intending to buy a property, 47% intend on bumping up their pension contributions specifically for this purpose, while 75% plan to borrow within their Sipp to finance their property purchase.
And nearly six in 10 investors reveal they would invest more in their pension if they didn’t have to buy an annuity.
Hargreaves Lansdown says: “The implications for the property market are intriguing; possibly pension funds will take up the slack in the market, keep prices buoyant and make it even harder for first-time buyers to join the game; possibly the arrival of pension funds will simply defer and intensify the price crash which some believe will inevitably arrive sooner or later.”
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