The group has started advising clients against investment in property, he says, both residential and commercial, in most of the UK. Instead, Gething says they should be allocating their money to indirect international property funds offering higher returns and a wider spread of risk.
Charles Ellingworth, the group's marketing director, says there were valid personal reasons for buying a UK property, for example finding somewhere to live, "but for pure investors it's very hard to justify at current yields."
In some parts of the country, net yields are as low as 3%, lower than the cost of borrowing. Despite this, thousands of investors are taking on big debts to build up large property portfolios. "People in Britain are still out there buying their flats on 98% leverage, which is fine in the current interest-rate environment, but if rates move up, their investment becomes negative," says Gething. "These buy-to-let investors are still fighting last year's war."
The group predicts that home prices, excluding London, would be no higher in five years time. However, prices in central London, were due for a recovery after treading water for the past few years. As for commercial property, Gething predicts that prices would continue to rise this year because of the "weight of money" trying to get into the market. Yet this was not sustainable in the long-term.
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