Boost for first-time buyers as fears of house price dip sparks £2.9bn property fund freeze

0

The outwardly un-stop ble housing market is likely to level out or even dip as nervous investors authority cash out of property investments amid fears the market in Britain could disintegrate.

The news is not great for those with significant exposure to property and as a device of the nic sweeping through the sector, a £2.9billion property y for giant was yesterday forced to freeze investors’ cash, following a stream in withdrawals from backers.

Managers of the Standard Life UK Real Resources fund have now stopped trading in a bid to stop the investment from collapsing and suffer defeat the cash of all its investors.

But a fall in prices is good news for first-time purchasers who have long struggled to get a rung on the property ladder.

The Standard Being fund will now have to raise cash by selling off some of their portfolio, previous to allowing investors to again access their investment.

Experts said assorted property funds, which spread cash over a range of investments, could look to take care of investors by preventing them from taking their cash – or liquidating their wait.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Capital goods funds are clearly under pressure as a result of the Brexit vote, and we could now see a new flutter of investors being unable to liquidate their property funds instantly, which we last witnessed during the financial crisis.

“This is de rtment of the problem with investing in open-ended property funds, and one of the reasons we don’t back them to investors.

“Property does offer diversification, and a reasonable cede com red to government bonds, but investors must be willing to accept intoxication costs, and a lack of liquidity when the market turns down.”

He added: “Given the outflows the sector earmarks ofs to be experiencing, this could well put downward pressure on commercial quality prices. The risk is this creates a vicious circle, and prompts assorted investors to dump property, until such time as sentiment stabilises.

“Remained low interest rates in theory provide support for commercial property, because as evaluates fall, yields become even more attractive.”

However, it’s not all extinction and gloom in property market.

Housebuilder Persimmon today released business results for the first half of the year, which showed average selling assays were up by six per cent and revenues had jumped by 12 per cent from definitive year to £1.49billion.

Mr Khalaf added: “Persimmon, quite rightly, feature out that it’s really too early to judge the effect of Brexit on the new homes merchandise.

“The com ny isn’t blinking when it comes to its capital return programme either, and until this plans to y out a further £5.50 per share to investors by 2021.

“Based on the current stake price, that means investors will get over a third of their investment stand behind in cash over the next five years, provided Persimmon are competent to make good on their promise.

“Low interest rates, and a big supply-demand imbalance in the UK case market, will continue to be supportive of the house building sector. Way people aren’t suddenly going to stop wanting to own a home completely because the UK is no longer going to be a member of the European Union.

“However, until we get a epitome of housing activity following the referendum result, the stock market is apt to to push the sell button first, and ask questions later.”

Leave a Reply

Your email address will not be published. Required fields are marked *