Danger of only investing in your home
February 7, 2007 by admin
Filed under News, News-Mortgages
We are being warned that we could be setting ourselves up for a fall by investing almost all of our money into a single property.
That is according to a report which states that almost two-thirds of us are running the risk of financial ruin by investing too heavily in a single asset.
Researchers at Durham University have discovered that as many as 62 per cent of us invest the majority of our money in a house and could face real difficulties if a housing market drop, like that seen in the late 1980s, were to take place.
“This study really draws attention to the precarious position of the majority of English homeowners’ savings,” said Susan Smith from the university.
“While many would think it strange to invest everything they have into one particular company, to all intents and purposes more than seven million people in England are doing just this by ‘banking on housing’.
“In fact, they are investing almost everything they have into just one building, in one neighbourhood, in one town, in one region, despite the hindsight of a recent housing market collapse,” she added.
The research found that 30 per cent of people take out a mortgage but do not see their home as a way of storing and accumulating wealth.
This apparent lack of vision when it comes to the housing market is even more alarming when you realise that 59 per cent have no other savings or investments to fall back on.
Homeowners are being advised to ensure that they have some secondary savings.
