Billions of pounds are likely to pour into British property next year from bonus spending financiers and investors saving in new retirement schemes, according to pensions and property professionals.
A survey of financial services workers by recruitment consultant Morgan McKinley found three-quarters of them expect to receive higher bonuses this year compared with last year. Up to 3,000 top bankers and stockbrokers could receive bonus payments of GBP1million ($13.8million) or more in January and February.
These payments will coincide with the launch of new property-related pensions schemes. Since April, pension savers have been able to include residential property in Self Invested Personal Pensions (SIPPs) which benefit from tax relief.
A survey of 200 exhibitors at last weekend's Property Investor Show in London found they expected GBP6.5billion would be ploughed into property SIPPs in its first year. Life Insurer, Standard Life, has received GBP1billion in investment for its property SIPP schemes. A survey carried out by online pension provider Sippdeal.co.uk found that two-thirds of its clients wanted property SIPPs.
John Wriglesworth, housing economist at market monitor Hometrack, said the bonus payments and property SIPPs would boost property sales. 'They will have an effect. And more widely, they will compound confidence which will be positive,' he said.
Mortgage lenders recently increased the size of home loans from 31/2 times the level of a borrower's earnings to five times, which would also help activity, he added.
'There is a whole host of other factors, too, such as lenders increasing multiples, which means people can afford more expensive properties, and lower interest rates, which will help create a healthy housing market,' he said. 'There are also the expectations of reits. It is the whole shebang.'