‘Real asset' characteristics bring favourable medium-term outlook

Expectations that the July IPD Monthly Index would show an increase in capital values after two years' declining figures were not met, falling short at -0.1%.

However, this remains the strongest rate of capital value movement that we have seen since the summer of 2007. Capital values in the property investment market peaked in June 2007 and have since fallen by 44%. This rapid decline is worse in nominal terms than the property crash of the early 1990s, although in real terms the outcome is much closer. The recent collapse was driven by a number of factors including a withdrawal of bank finance and redemptions from retail funds resulting in forced sales in direct property. I remain cautious about short-term prospects for property as an asse...