House Prices Begin A Nervous Recovery

1945: House of Fear - Roy William Neill

Perhaps your major asset - your home is on the increase in value (finally). The average house price last month was £163,803 (yes I know - where is this house? there certainly isn't an average house in London worth this amount!) in July, last summer the average price was £163,765. You will notice that there is little real difference, but this comes after data that had previously revealed month on month price falls, this trend was bucked in March (according to Halifax) by a 2.20% rise in prices. No doubt the mathematicians amongst you will appreciate that in real terms property prices are therefore falling behind inflation. One also has to question... so what? if you live in the house, its short-term market price is hardly an issue - its only when you want to sell that it becomes a problem - unless you are a landlord. Property price rises may give rise to questions about possible capital gains tax bubbles and when/if to sell or let the property. The truth is that property is not very liquid, the buying and selling process is fairly protracted. Another property truism - is that its all about location, location, location.

Good financial planning will involve considering your options with respect to your home. Some people will find that their home provides a useful form of capital - either by downsizing and releasing equity or by taking out a loan against the value of the property. Invariably this is done to provide income to meet expenses. I would counsel a great deal of caution if you are considering taking a loan against your home. This can end badly and needs expert counsel to avoid considerable distress that many have suffered when they understand that their debt compounds with interest and can result in nothing being left - which might be suitable to some people, but on the proviso that they have understood the mechanics of the loan - which few seem to do. Great financial planning will help identify stress points in your future cash flow and provide advance warning as well as possible solutions. The art in financial planning is knowing what questions to ask.