Estate agents' signs outside houses
The internet has changed the way we do many things in life. How we shop, keep in touch with friends, read the news, even nose on our neighbours.
Yes that’s right, thanks to Rightmove and other such sites, we can now spend our leisure time snooping on the interior decorations of our neighbours’ homes up for sale and judge whether in our opinion they have been priced appropriately.
Alternatively, you may even set yourself an imaginary budget and launch yourself on a virtual viewing tour to find your dream home, without even leaving your current one. It’s an easy way to pass the time.
I guess I’m not the only one doing this. Yesterday, Rightmove published their January House Price Index and reported a 5% rise in visitors to their website in the first two weeks of this year. This translates to an average of over 4.5 million visits per day. But are they all serious buyers and sellers?
I doubt it. According to Rightmove the housing market is muted with a small rise this month in house prices of 0.4%, the lowest monthly rise at this time of year since January 2012. The property website also reported the average price of a London home has fallen below £600,000 for the first time since August 2015, which is well below its peak of almost £650,000 before the Brexit vote in 2016.
Rightmove confirmed that the number of properties coming to market in the first two weeks of the year are broadly the same as a year ago, with only a 2% drop and a change in regional emphasis towards north of England properties than London and the south.
The estate agent Your Move has also reported lacklustre numbers, saying house prices in England and Wales rose 0.3% in December, with the annual change figure now at 0.6% - its lowest level since 2012.
With continued uncertainty over Brexit affecting the economy, the housing market is an important barometer of how the overall economy is doing. For most of us our home is the largest asset we own and will play an important role in our retirement plans.
“My property is my pension” is a phrase I’ve often heard when friends and family talk about saving for the future. For many people, especially the baby boomer generation now reaching retirement age, property has been their best performing asset by far. It’s easy to see the logic – borrow as much as you can, while you can, to move up the property ladder or invest in home improvements, so one day you can realise that gain.
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But it’s worth remembering that putting all your eggs in one basket has its risks too. We’ve all become quite used to record low interest rates and it’s quite easy to forget the impact of your mortgage payments creeping up with each rate rise and the knock-on effect it has on the housing market, as well as day-to-day spending.
For those thinking of making their property their only pension, it would be wise to consider investing in other assets through tax-efficient ISAs and pensions so you’re not just dependent on the fortunes of the property market or the latest equity release schemes.
With the end of tax-year approaching in April, it’s a good reminder to consider the tax advantages of investing for the long term through ISAs and pensions. It’s also worth remembering that these are just wrappers around investments and the most important thing is what you hold within them.
If you’re looking for fund ideas, a good starting point is Tom’s ISA Picks for this year. These are four funds, investing in different regions around the world, specifically chosen by our investment director Tom Stevenson from our Select 50 list of recommended funds.
As well as an ISA, they can also be held in our SIPP (self-invested personal pension). The picks include the Fidelity Select 50 Balanced Fund which celebrates its first anniversary in February. This fund provides a one-stop, well-diversified fund, with a more cautious approach, which is a more defensive option when the market outlook looks uncertain.
More on Tom’s ISA Picks for this year
More on Fidelity Select 50 Balanced Fund
The value of investments and the income from them can go down as well as up, so you may not get back what you invest. Tax treatment depends on individual circumstances, and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55. Select 50 is not a personal recommendation to buy funds. Reference to specific securities or funds should not be construed as a recommendation to buy or sell these securities or funds and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.