Star comment: Rising house prices aren’t good news for everyone

Each week brings a new story about record house prices. At first glance, the increases are good news. Landowners share in the wealth of the country as the value of their assets increases.

However, there is a flip side and for first-time buyers, the nightmare continues. The cost of accessing the housing ladder simply goes way over the top and the provision of housing that was once the responsibility of local authorities has largely disappeared. Those in need of real estate must now turn to private landlords, whose main interest will be profit rather than providing the best quality housing.

These are uncertain times and people with mortgages are rightly concerned that raising interest rates to curb inflation will put them in debt. Household budgets often have little margin for error and paying more money on the mortgage means cutbacks elsewhere or the simple inability to pay. For those in the rental sector, landlords continue to raise rents to new record highs.

Many people will have seen the housing market “blow out” on other occasions, with a consequent drop in values. We have already experienced the situation of families who lost their homes because they did not have the means to repay. We may be heading in that direction again. A bear market normally leads to a crash.

Hopefully house prices won’t crash, but the warning signs are there. This happened in 1989 and 2008. It would be wrong to dismiss the possibility of house prices falling, driving people into negative equity. The rule of thumb is to invest in housing with open eyes and finances capable of dealing with all eventualities.

We live in uncertain times. The Covid pandemic has brought a period of unimaginable change and it will take a few years to fully recover. As we emerge from this economic and emotional trauma, we are also witnessing the horrific scenes of Putin’s war in Ukraine, which is causing bloodshed and economic damage.

Against this backdrop and the challenges of funding the NHS and social care, the nation must also grapple with its national agenda. For individuals, that means planning for retirement early – and that means at 20, rather than 50.

With the cost of living rising and the effectiveness of pension plans not keeping pace, it is essential that people receive advice on how to invest their money. Taking expert advice and putting money aside every week is the only surefire way to ensure personal protection in retirement.

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