It will not come as a surprise that Brexit uncertainty is dragging the UK property market downwards. The latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) shows average stock levels on estate agents’ books are close to a record low, while the number of enquiries from buyers has fallen for the eighth month in a row.
Those houses that are on the market are not selling particularly fast. According to the March poll of surveyors, the average time taken for a residential property to sell remains unchanged at 19 weeks, the joint longest since the RICS started recording data in 2017.
Looking at the most recent figures from the Halifax Price Index, released last week, house prices are sluggish. The average UK house price is £233,181, following a 1.6% monthly fall in March. However over the three months to March house prices were 1.6% higher than in the preceding three months (October to December).
That was over the winter months, which for many is not a preferable time to move house unless you really have to. Now that we’re in spring, all eyes will be on whether the more speculative home buyers and sellers make an appearance, but I expect the ongoing Brexit uncertainty will cause more inertia.
In these unclear times, the housing market is an important barometer of how the overall economy is doing. For most of us our home is the largest asset we own and its value and ‘saleability’ can directly affect how wealthy we may or may not feel.
“My property is my pension” is a phrase I’ve often heard when friends and family talk about saving for the future. For many people, especially the baby boomer generation now reaching retirement age, property has been their best performing asset by far. It’s easy to see the logic – borrow as much as you can, while you can, to move up the property ladder or invest in home improvements, so one day you can realise that gain.
But it’s worth remembering that putting all your eggs in one basket has its risks too. We’ve all become quite used to record low interest rates and it’s quite easy to forget the impact of your mortgage payments creeping up with each rate rise and the knock-on effect it has on the housing market, as well as day-to-day spending.
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For those thinking of making their property their only pension, it would be wise to consider investing in other assets through tax-efficient ISAs and pensions so you’re not just dependent on the fortunes of the property market or the latest equity release schemes.
At this time of year, having just entered a new tax year on 6 April, it’s a good reminder to consider the tax advantages of investing for the long term through ISAs and pensions. It’s also worth remembering that these are just wrappers around investments and the most important thing is what you hold within them.
If you’re looking for fund ideas, a good starting point is Tom’s ISA Picks for this year. These are four funds, investing in different regions around the world, specifically chosen by our investment director Tom Stevenson from our Select 50 list of recommended funds. As well as in an ISA, they can also be held in the Fidelity SIPP (self-invested personal pension).
Tom has also completed his latest April 2019 Investment Outlook which was published in a live webcast on 9 April. In the 30 minute webcast you can get his view on the outlook for the main asset classes and equity markets around the world. He also answered questions directly from customers in a live Q&A session. You can watch it here.
The value of investments and the income from them can go down as well as up, so you may not get back what you invest. Tax treatment depends on individual circumstances, and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55. Select 50 is not a personal recommendation to buy funds. Reference to specific securities or funds should not be construed as a recommendation to buy or sell these securities or funds and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.