Wealthy investors plan to boost their holdings in UK property, as “uncertainty around the economy and house prices creates potential opportunities,” says an Investec survey.
A poll of high net worth individuals, earning more than £510,000, found that 77% of them are looking to invest in UK property.
On average they say they will invest an additional £380,000 – with around 11% planning to increase their individual exposure to the sector by £500,000 or more.
The report adds that 14% plan to reduce their exposure to the sector, 3% are looking to divest entirely, while 6% plan to sit on their holdings.
Their confidence in UK property suggests a positive outlook on house prices and interest rates among rich investors and continuing support for buy-to-let investment and remortgaging, it says.
The UK average home price lifted 2.9% to £363,249 in February from a year ago, according to E.surv data last week. The monthly rise of 0.8% last February was the largest price hike in 17 months.
The Bank of England base rate remains at 5.25%, although the City is currently pricing in three 0.25% falls this year from June.
The survey adds that the confidence of wealthy individuals in the sector is mirrored in the way they use property to borrow against other assets.
It says: “Around 58% said they have borrowed against an investment portfolio, with 21% of those people borrowing £250,000 or more.
“Typically, these loans are taken out to reinvest into the portfolio or to assist family members with buying property.”
Investec private banking team lead Cheryl Quinn points out: “Despite uncertainty around house prices, as a business we are seeing that a large number of high net worth individuals remain optimistic about the sector.
“Many view the current instability as an opportunity for increasing their exposure to UK property at an attractive price point and very much value the ability to leverage income in order to fund investment properties.
Quinn adds: “However, these individuals can struggle to access lending because of their complex income profiles.
“This is particularly true of City professionals, who often receive a large part of their renumeration as discretionary income, and entrepreneurs, who usually have a large part of their wealth tied up in their businesses.
“This, combined with the current market uncertainty, means that clients need to think carefully and seek independent expert advice before any major decisions.”
The bank used research firm PureProfile to poll 100 corporate executives, finance professionals and entrepreneurs in October.