Homeowners warned of saving risk

A housing market crash could bring financial disaster for millions of people, experts are warning.

Researchers at Durham University found that nearly two thirds of English homeowners were putting nearly all of their savings into their homes.

Although many did not think of homes as a means of storing wealth, they had no other investments apart from a pension.

There are fears that banking on housing could have a devastating financial and social impact if prices drop.

Precarious position

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 that many people were in a precarious position.

"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."

Stewart Lilly, president elect of the National Association of Estate Agents, said that people's homes were "still their castles".

He said: "A lot of people put money into investment companies, but what do investment companies put money into - property."