Money Saving Tips

Property vs savings Nationwide reported that house prices fell by 0.4% in April after last month's surprise 0.9% rise. However, according to lenders' latest figures there is evidence that the rapid rate of decline is now easing, showing house prices down by 3.1% in April compared to 4.1% in March and 4.8% in February. The Royal Institution of Chartered Surveyors recently delivered a report pointing out there is further interest from potential buyers and the possibility of house prices stabilizing, this year. Also according to Hometrack Study, there is evidence the property market is improving and own house property prices falling is at the slowest rate for more than a year in April. Due to this recent sharp falls in UK property values, the question arises whether it is worthwhile that money be left in the bank rather than it is invested in a property. But, looking at the savings angle, property investment seems to do better than money saving in bank, as house price booms has been seen over the past decade. According to moneyfacts.co.uk, if you invest £100,000 into an instant access account in March 1998, based on the average rate payable, the money would now be worth £135,705. But, house price increase since 1998 has been up by 25%, so your cash would have lost a quarter of its value bringing it down to £75,000, if you had saved it in bank. According to the Nationwide house price index, a typical UK property bought for £100,000 in 1998 had been worth £250,000 at the end of last year. If the house had been bought in the London area, the value would have been £260,000. So, the property market seems to do better than cash in bank. In the meantime, Halifax’s recent head-line grabbing report indicated that the regional figures for the first quarter of 2008, actually showed house prices rising in some areas. The problem is that it does not much seems to be selling, because no one is dropping house prices. So, even with recent house price falls, we see property investment is still well ahead rather than banking-in cash.