UK residential property values will continue to rise a fraction while the commercial market adding up to 10% in 2005, an international property consultant has predicted.
This follows the surprise news on Friday from Halifax, indicating house prices had increased 1.1% in December.
While King Sturge forecasts good returns for buildings and industrial property, at an increase of 9.4% and 10.4% respectively, the property specialist also predicts growth of up to 3% for the residential sector.
The firm believes preparations for the expansion of Self Invested Personal Pension schemes (SIPPs) in April 2006 will boost consumer confidence, along with an increase in stamp duty thresholds.
It adds key to good performance of property values going forward is asset management, as there is a need to work properties and income streams.
In this spectrum, specialist funds and property companies are likely to come to the fore it says.
Avril Butt, partner at King Sturge says:
“Consumer demand in 2005 promises to improve. Borrowing, in particular, remains affordable and developers are already prepared to be more flexible on pricing. Demand is always price sensitive and could increase in a softening market in London and the South East.”
Richard Batten, investment partner at King Sturge says the 2004 market moved away from traditional property dynamics, as people ploughed money into the property investment market, hardening yields traditionally by added security or rental growth.
“Given the continued uncertainty in equities, combined with the anticipated poor performance from gilts, especially in an election year, property is likely to be a major, and increasing, component of any institutional investment,” says Batten.IFAonline
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