Investors and public split on whether to invest property or shares

There is a widening gap between active private investors and the general public over whether it is better to invest in property or shares.

15:35 12 November 2004

There is a widening gap between active private investors and the general public over whether it is better to invest in property or shares, according to the Association of Investment Trust Companies (AITC).

While majority of active investors are increasingly favouring equities, the general public still believes property will outperform the stock market over the next 12 months.

In fact, the general public believe this more now than they did at the beginning of the year.

Some 53 per cent of active investors expect the stock market to outperform the housing market over the next 12 months, compared with just 15 per cent of the general public.

Of these active investors, one in five (22 per cent) are concerned about future growth in the price of houses; fearing interest rate rises have already dampened the market. A further 20 per cent say property is just too expensive.

The majority of the general public on the other hand are keeping their faith in property. Some 40 per cent expect the housing market to outperform equities, compared with just nine per cent of active investors.

Most active investors are prepared to put their money where their mouth is - 46 per cent plan to increase their stock market exposure over the next six months, compared with just six per cent of the general public.

Annabel Brodie-Smith, communications director, AITC, said: "Interest rate rises and an apparent slowdown in the housing market have clearly not been enough to switch the general public off property and onto equities.

"In other research conducted in February this year, 36 per cent expected property to outperform the stock market and this has now increased to 40 per cent.

"Conversely, active investors are increasingly optimistic about the stockmarket. Those expecting equities to outperform property have increased their majority from 44 per cent in February this year to 53 per cent today, possibly encouraged by the recent modest improvement in markets."

In recent weeks the FTSE 100 UK share index has surged to record highs of over 4,700, while the average house price in the UK has declined at its fastest rate for four years.