Don't bet on house prices for savings

HOMEOWNERS are wrong to believe house price rises can make up for a shortfall in long-term savings, director-general of the Association of British Insurers Mary Francis warned today.

She told a Treasury Select Committee hearing into the life insurance sector that there was a growing risk homeowners had been over-influenced by the red-hot property market.

The ABI puts the UK savings gap at £27bn and has argued that people will face a shock when they retire if they do not save substantially more.

Francis told the MPs: 'I am sure that...people are hoping to use their property to produce some retirement income. But I would question whether people have been over-influenced by the increasing value of their property in recent years into assuming that in the long term property will always outpace everything else.

'People seem to believe they can rely on housing if all else fails. I would question if that might be an over-optimistic view - I think there's a danger of putting too much trust in that.