Investors favour UK property over shares

Investors may be too exposed to commercial property, such as shopping centres (Getty Images)

Investors have become more bullish about bricks and mortar as the outlook for property has improved across the country.

In fact sentiment has improved so much that the sector has the most positive results in the latest Lloyds TSB Private Banking Investor Confidence Index.

Improving sentiment in areas like Wales, the West Midlands and North-west has added to the already towering confidence in London to lift the sentiment level to 32 per cent. Some 44 per cent of investors think the outlook for property is positive in the next six months, against 12 per cent who think it is negative.

That's a massive climb in just three months. In April the positive sentiment for property stood at just 8 per cent, leaving it the fifth-highest asset class, behind gold, emerging-market shares, commodities and UK shares. Over the same period, sentiment for gold has slumped from 46 per cent to just 12 per cent.

"Housebuilders have performed well in the stock market recently, mainly as a result of government programmes to boost house sales," said Ashish Misra of Lloyds TSB Private Banking. But when it comes to commercial property – offices, factories and shopping centres – he said some investors may already be too exposed.

Meanwhile Jonathan Hopper, of property search consultants Garrington, warned investors not to get too carried away with bricks and mortar. "Yes, the property market is in a much healthier state, and initiatives like Funding for Lending have played a key role. But the market is not out of the woods yet," he warned.