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Investors ignore warnings over property prospects

Industry caution over the prospects for the housing market is being ignored by investors, says a survey from Invesco Perpetual.

Despite extensive media coverage and industry warnings over falling house prices, investors still feel that residential property will yield good returns.

The research, conducted by YouGov in January, sampled 533 cash or equity Isa holders across various providers. Forty-one per cent believe housing is most likely to show the best returns, up 1 per cent on last year’s results. After housing, 19 per cent opt for UK equities and 13 per cent for fixed income. Only 2 per cent are confident that US equities will outperform.

Invesco Perpetual head of investment Neil Woodford says: “Residential property has undoubtedly been a good investment over the past few years but it is dangerous to project these returns into the future. Relative to equities, the valuation of residential property now looks extremely stretched. I believe there will be a downward correction over the next two to three years.”

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