dothesums blog

Link: http://www.dothesums.co.uk/blog

It is widely reported in the news that the average house price has appreciated by £2300 to £154,000, the second rise in three months.

How can this be? Prices that have overshot on the upturn should overshoot on the downturn surely? Those predicting further 'house price crash' falls must be wondering what is happening? Those waiting to come into the market after more price drops will be worried that they have left it too late? Have we reached the bottom of the market and if so, what is the cause?

I think there may a clue in the past performance of financial products.

Twelve months ago a friend received a forecast from the trustees of her pension fund anticipating her retirement in April this year. She has now received the pension and finds that it has been reduced by 17.5% compared to the forecast. This is on top of a long term poor performance record. Fortunately it is not her main vocational pension. Nevertheless this appears not to be unusual, in fact it is becoming the norm. I seem to be meeting more and more people who have been badly let down by the financial services sector in respect of insurance policies, endowments, savings and especially pensions. We ourselves lost money in the collapse of Northern Rock.

Could it be that the public having lost confidence in financial products and want to invest in something they can see, manage and control and the long term asset they are beginning to turn to, is property?

I think it just might be.