Table of Contents
Issues in the Market
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- Main findings of the research
- Abbreviations
Insights and Opportunities
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- Consumer appetite for property may be starting to wane…
- …but there is still strong latent demand for buy-to-let investments
- Falling property prices could stimulate investment in property
- A significant minority feel property can provide for their retirement
Market in Brief
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- Property is the household sector’s main asset class
- A booming housing market has encouraged property investment
- Tenant demand is likely to increase in the coming years
- The buy-to-let sector has seen spectacular growth
- The property-based unit trust market has also grown significantly
- Trade perspective: The rationale behind buy-to-let remains compelling
- Mintel’s research findings: Investment portfolio
- Mintel’s research findings: Property as investment
- Mintel’s research findings: Future intentions and expectations
- Mintel’s research findings: Impact of the credit crunch
- Mintel’s research findings: Attitudes towards property investment
Fast Forward Trends
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- Trend: Home as pension
- The rise of the property investor
- Capturing the imagination
- Property provides assurance?
- Trend: Universal uncertainty
- Global financial markets
- Headlines undermine confidence
- Changing attitudes and their implications
Asset Ownership
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- Key points
- Owner-occupation has risen sharply in the last three decades
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- Figure 1: Proportion of households in England and Wales, by tenure, 1981-2007
- Property is the household sector’s main asset class…
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- Figure 2: Composition of net wealth of the household sector, UK, 1987-2007
- …but most people’s homes are not merely an investment
Strengths and Weaknesses in the Market
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- Strengths
- Weaknesses
Competitive Context
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- Key points
- Property is a unique proposition
- Pensions represent main competition
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- Figure 3: Individual pension sales, 2001-07
- Cash ISA sales soar in 2007/08, but stocks and shares ISAs stagnate
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- Figure 4: Amounts subscribed to ISA accounts, by cash and stocks and shares components, 1999/2000 to 2007/08
- Collective investment sales suffer
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- Figure 5: Net retail sales of UK domiciled unit trusts/OEICs, 1998-2008
Trade Perspective
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- Short-term pain; long-term gain in the property market
- Experienced landlords are widely expected to hold their nerve
- The rationale behind buy-to-let remains compelling
- Funding restrictions continue to constrain the buy-to-let market
- Lower property prices will provide opportunities for portfolio landlords
The Property Market
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- Key points
- The property market has enjoyed a decade-long boom
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- Figure 6: Property transactions in England and Wales, 1980-2007
- House prices have more than tripled in the last 12 years…
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- Figure 7: UK standardised average house prices (seasonally adjusted) 1995-2008
- …although activity in the housing market has now started to wane
- The length and severity of the downturn is now the key issue
- Property investors will need to adapt to this new environment
Broader Market Environment
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- Key points
- The long-term outlook remains positive for property investors
- A rise in the number of households will boost housing demand
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- Figure 8: Total number and average size of households in the UK, 1991-2013
- The growth in one-person households is particularly positive
- Rising student population is also increasing tenant demand
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- Figure 9: Number of Higher Education students in the UK, by level of study, 1980/81-2005/06
- Rising immigration has provided a boost to the rental sector
- Changing lifestyles are also influencing housing demand
- The number of housing starts is falling sharply
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- Figure 10: House building: permanent dwellings started in the UK, by region, 2005/06-2007/08*
- Housing supply is failing to meet the increase in demand
Internal Market Environment
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- Key points
- The credit crunch is still impacting the mortgage market
- Liquidity shortages continue to plague the mortgage market
- The future path of interest rates will prove to be crucial
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- Figure 11: Bank of England base rate, end of quarter, 1972-2008
- Returns on commercial property have slumped
- Average rental yields languish at relatively low levels…
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- Figure 12: Average rental yields for England and Wales, monthly data, 2002-08
- …but rental yields are now starting to rise
- Survey evidence suggests landlords’ confidence remains high
The Buy-to-Let Market
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- Key points
- Specialist subsidiary brands dominate the buy-to-let market
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- Figure 13: Leading providers in the buy-to-let mortgage market, 2007
- Buy-to-let loans outstanding totalled £120 billion at end of 2007
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- Figure 14: Buy-to-let mortgages outstanding, 2000-07
- The buy-to-let sector accounted for 12% of advances in 2007
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- Figure 15: Buy-to-let gross advances, 2000-07
- There is evidence that buy-to-let activity has started to wane
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- Figure 16: Buy-to-let mortgage market, quarterly data, 2007 and 2008
- The level of arrears and possessions has started to rise
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- Figure 17: Buy-to-let mortgages three ore more months in arrears, 2007 and 2008
Indirect Property Investment
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- Key points
- Property investors can utilise a number of investment vehicles
- The property-based unit trust market has grown significantly
- A wide array of providers promote a range of property funds
- Property schemes accounted for a fifth of unit trust sales in 2007…
- …although performance has dipped in the last nine months
- The immediate outlook does not look particularly promising
- REITs provide a new opportunity for indirect investment
- There are strict limits on REIT eligibility
- Total market capitalisation of UK-based REITs is £21 billion
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- Figure 18: UK-based REITs, July 2008
- It was hoped that REITs would help stimulate investment…
- …but only 1% of consumers currently own a REIT
- Increased IFA awareness offers some hope for the future
The Consumer – Investment Portfolio
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- Key points
- Survey background
- Property investment is still a relatively niche sector
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- Figure 19: Investment ownership, May 2008
- One in seven ABs hold property-based investments
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- Figure 20: Investment ownership, by gender, age, socio-economic group and age/socio-economic group, May 2008
- High earners are most likely to invest in property
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- Figure 21: Investment ownership, by lifestage, Mintel’s Special Groups, working status, income and TV region, May 2008
- Almost one in six M&S customers own property investments
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- Figure 22: Investment ownership, by technology users, commercial TV viewing, newspaper readership and supermarket used, May 2008
- High earners, ABs and 45-54s are prime buy-to-let investors
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- Figure 23: Summary of property investor profiles, May 2008
The Consumer – Property as Investment
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- Key points
- Consumers tend to favour the risk-averse savings route
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- Figure 24: Preferred method of saving for the future, by gender, May 2008
- Men less risk-averse?
- The 25-34s are more likely to consider property investment
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- Figure 25: Preferred method of saving for the future, by age, May 2008
- A fifth of C2s feel buy-to-let is a particularly good way to save
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- Figure 26: Preferred method of saving for the future, by socio-economic group, May 2008
- Consumer enthusiasm for property appears to have waned
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- Figure 27: Preferred method of saving for the future, 2007 and 2008
- Four in ten current property investors favour buy-to-let
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- Figure 28: Preferred method of saving for the future, by investment ownership groups, May 2008
The Consumer – Future Intentions and Expectations
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- Key points
- One in six consumers might buy an investment property
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- Figure 29: ‘Seriously considering buying an investment property in next five years’, May 2008
- The 18-24s are most inclined to purchase an investment property
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- Figure 30: ‘Seriously considering buying an investment property in next five years’, by gender, age, socio-economic group and age/socio-economic group, May 2008
- A third of the ABC1 pre-/no family group might buy a property
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- Figure 31: ‘Seriously considering buying an investment property in next five years’, by lifestage, Mintel’s Special Groups, working status, income and TV region, May 2008
- Over a third of property investors want to expand their portfolio
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- Figure 32: ‘Seriously considering buying an investment property in next five years’, by investment ownership groups, May 2008
- Fewer consumers are considering the purchase of a property
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- Figure 33: ‘Seriously considering buying an investment property in next five years’, 2007 and 2008
- A fifth of consumers feel it is time to exit the property market
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- Figure 34: ‘Now is a good time to get out of the property market’, May 2008
- More than a quarter of C2DE 18-34s are property pessimists
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- Figure 35: ‘Now is a good time to get out of the property market’, by gender, age, socio-economic group and age/socio-economic group, May 2008
- High earners are most optimistic about the property market
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- Figure 36: ‘Now is a good time to get out of the property market’, by lifestage, Mintel’s Special Groups, working status, income and TV region, May 2008
- A fifth of property investors feel it is a good time to exit the market
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- Figure 37: ‘Now is a good time to get out of the property market’, by investment ownership groups, May 2008
- Almost half of all consumers expect property prices to fall
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- Figure 38: Property price expectations, May 2008
- Just under six in ten ABs think property prices will fall
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- Figure 39: Property price expectations, by gender, age, socio-economic group and age/socio-economic group, May 2008
- Consumers are far more pessimistic now than a year ago
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- Figure 40: Property price expectations, 2007 and 2008
- Half of all property investors expect house prices to fall
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- Figure 41: Property price expectations, by investment ownership groups, May 2008
- Falling property prices will not deter all potential investors
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- Figure 42: Property price expectations, by agreement with ‘Seriously considering buying an investment property in next five years’, May 2008
The Consumer – Impact of the Credit Crunch
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- Key points
- Most property investors have retained faith in the market
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- Figure 43: ‘Only an idiot would invest in property at the moment’, May 2008
- Relatively few ABC1 35-54s doubt the wisdom of property investment
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- Figure 44: ‘Only an idiot would invest in property at the moment’, by gender, age, socio-economic group and age/socio-economic group, May 2008
- A third of low earners question the sanity of property investors
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- Figure 45: ‘Only an idiot would invest in property at the moment’, by lifestage, working status, income and TV region, May 2008
- Lower property prices would tempt some buy-to-let investors
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- Figure 46: ‘Would be tempted to invest in buy-to-let if property prices fell significantly’, May 2008
- The 18-34s are most likely to be tempted by falling prices
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- Figure 47: ‘Would be tempted to invest in buy-to-let if property prices fell significantly’, by gender, age, socio-economic group and age/socio-economic group, May 2008
- Lower property prices would tempt almost a third of Londoners
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- Figure 48: ‘Would be tempted to invest in buy-to-let if property prices fell significantly’, by lifestage, working status, income and TV region, May 2008
- Half of all consumers feel strong tenant demand will boost buy-to-let
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- Figure 49: ‘With more people looking to rent, it's a good time for buy-to-let properties’, May 2008
- Six in ten 18-34s feel rental demand will support buy-to-let
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- Figure 50: ‘With more people looking to rent, it's a good time for buy-to-let properties’, by gender, age, socio-economic group and age/socio-economic group, May 2008
- A high proportion of Scots feel tenant demand will aid buy-to-let
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- Figure 51: ‘With more people looking to rent, it's a good time for buy-to-let properties’, by lifestage, working status, income and TV region, May 2008
The Consumer – Attitudes towards Property Investment
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- Key points
- High house prices remain a concern for over a third of consumers
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- Figure 52: Attitudes towards property investment, 2007 and 2008
- Fewer consumers feel property is the key to retirement planning
- One in ten people feel renting is better value than buying
- A third of men feel their house is just a home
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- Figure 53: Attitudes towards property investment, by gender, May 2008
- More than a third of 25-34s worry about mortgage rate rises
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- Figure 54: Attitudes towards property investment, by age, May 2008
- Almost four in ten ABC1s keep an eye on house prices
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- Figure 55: Preferred method of saving for the future, by socio-economic group, May 2008
- Dissecting the sample according to attitudes towards property
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- Figure 56: Typologies based upon attitudes towards property, by gender, age, socio-economic group, lifestage, Mintel’s Special Groups, income and TV region, May 2008
- The Safe as Houses cluster enjoy high property penetration rates
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- Figure 57: Investment ownership, by property typologies, May 2008
Key Targets and Future Prospects
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- Key points
- Assessing consumer sentiment
- Methodology
- Positive sentiment has declined
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- Figure 58: Range of propensity to invest, May 2008
- Property investment is less appealing for the over 55s
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- Figure 59: Demographic breakdown of target groups, May 2008
- Background demographics unfavourable for future growth
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- Figure 60: Impact of demographic changes on potential consumer base, 2008 and 2013
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