IPD today released the results for the 2007 IPD UK Residential Investment Index. The UK residential investment market saw an overall total return to investors of 17.0% in 2007, up from the 16.4% total return in 2006. Residential property by far outperformed equities and bonds in 2007, which returned 5.3% and 6.4% respectively. The 17% total return was also way above the 2007 commercial property return of -3.4%. Over three years, both residential and commercial property delivered double-digit returns.
All regions achieved returns in excess of 11.0%, with the exceptions of South West, Midlands & Wales (at 8.1%) and Northern England (4.3%). In a continuing trend, the spread of regional returns in 2007 was almost entirely driven by relative capital appreciation rates - as income returns converged yet further.
The spread in income return between the highest yielding region - South Eastern at 3.8% - and the lowest - Central London at 3.0% - was at an all time low after overall return levels dropped a further 36 basis points in 2007. In line with previous years, 36% of gross income was lost due to voids, maintenance costs, management costs, insurance, utilities and other irrecoverable costs.
Co-founding Director of IPD, Ian Cullen said, "In stark contrast to last year's performance of the commercial property market in the UK, residential investment delivered its highest return in five years, and the second highest on record