While we continue to see headlines of a rise in property prices and the government keep telling us that things have never been better, it seems that all is not well underneath the surface. Recent figures from the authorities have shown that the UK savings rate to income ratio is at the lowest for some 47 years. Currently the UK population are only placing 2.1% of their income into savings, a very similar situation to the start of the 1987 property crash!
While the figures themselves have caused some alarm in the City, the expected further quarter percent base rate rise next week should prompt an improvement in the savings ratio. However, it has taken some time for the UK consumer to even consider that this current economic boom will not last forever. In effect there has not been a boom, only a massive rise in property prices, which has over shadowed even the most depressing of economic news.
After so many indications that the current property boom was over, it is proving ever more difficult to call the top of the market. The major concern is that when the top of the market does eventually come, many consumers will have no savings to fall back on, and many may miss the best of the property market rise if the hold on too long.
Many people have ignored the relatively attractive savings rates currently on offer, although at some point this is sure to prompt an encasement of investment as cash may soon become king over the next few months.