We live in a world of debt and the circumstances that existed when we got into this situation are changing. Most of us who have debts have been streadily building them up over a period of time. The growth may not have seemed significant when our houses were increasing in value and giving us a sense of financial security. There were times when my house was increasing in value faster than I was earning money. At that time it almost seemed there was no need to work because I could have just sat back and made money from the increasing value of my home.

Many people did decide that property was the way to go and they bought houses as investments and were doing very well out of it, on paper. What seemed to be an unstopable rise in the value of property appears now to have been a bubble. Just how big that bubble was will only be understood over time but there is little doubt it was a temporary bubble.

The value of property does of course rise over time and no doubt will do again but it is usually in proportion to wages and a other factors. The bottom line is that houses rise because people want to buy them and have the money available to buy. If the money is in short supply or the prices are unaffordable then there can be no real growth in the value of houses because nobody can afford to buy them.

The financial industry have done their best to keep property values rising by making more money available in greater amounts and with less restrictions on who was able to borrow. The government have tried to find ways to help the market by giving support to people who want to buy. All these measures merely supported an unrealistic market and as the availabilty of loans began to dry up following the credit crunch the whole property market had to face reality.

We are now experiencing a period where the housing market is adjusting to the new situation. There is less demand, less availability of money and house prices have fallen below their peak levels. Prices are likely to continue to ease for some time until the market finds it’s balance point between supply and demand. Where that level ends up nobody knows but it is a lesson for us all.

Property may be seen as an investment but when you are talking about your home it is not one you can deal as easily as stocks and shares. It’s value may increase but it can also fall. The demand will remain high but not everybody can afford to buy and values will remain tied to earnings and availability. You may invest in your home and it may be a good investment over a period of years but ultimately, it is your home and it is somewhere to live, nothing more.

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)

There has been an interesting development in the bank charges campaign. We have had the result of the court case brought by the office of fair trading but that is being appelled by the banks.

In the meantime Barclays has annouced that they are introducing a new system of charging. They plan to have a bufferzone of £250 which if you go overdrawn you can make use of. There will be a charge of £22 which will pay for the use of this extra overdraft and no further charges will be made for any other transactions that remain within this limit for a period of up to 5 days. Beyond that period there will be additional charges of £8 per transaction which is beyond any agreed overdraft.

It is an interesting approach and certainly better value than a £35 charge for every single transaction. It does still seem expensive if you make the odd overlimit transaction but if you have several which would previously all have been charged this could be a much better deal.

It does seem to be a significant improvement over the previous policies and must be welcomed for that. It seems to be a useful step forward.

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)