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Nearly two-thirds of homeowners are putting themselves at financial risk by piling almost all their savings into one single asset - their house, a report claimed today.
A new study highlights the danger that millions of families face should the value of the housing market drop or experience a crash similar to that of the late 1980s.
Researchers from Durham University found that 65% of English homeowners are putting nearly all their savings into their home.
Almost 30% of people in the study said they did not use, or think of, their homes as a means of storing or accumulating wealth, despite the fact that 59% of them have no other savings investments apart from a pension.
According to the authors of the report, only a quarter of mortgage-holders in England were making the most of their capital by spreading it between home ownership and a more diversified financial portfolio.
Susan Smith, professor of geography at Durham University, said: "This study really draws attention to the precarious position of the majority of English homeowners' savings.
"While many would think it strange to invest everything they have into one particular company, to all intents and purposes more than seven million people in England are doing just this by 'banking on housing'.
"In fact, they are investing almost everything they have into just one building, in one neighbourhood, in one town, in one region, despite the hindsight of a recent housing market collapse."
If the housing market did take a turn for the worse, the political, economic and social impact could be devastating, the report states.
Commenting on the study, David Elms, chief executive of IFA Promotion, said: "It is worrying that so many people have so little savings outside their family home.
"Everybody needs some savings to see them through a rainy day, such as illness or being out of work. The danger is, of course, that people will be tempted to borrow more to tide them over, exactly at the time when they shouldn't really be increasing their debt."
Copyright Press Association 2007
