99% of you still think property's a good investment

Almost three million working Brits are still relying on their property to fund their retirement according to research from Barings Asset Management. And that's despite the whopping £29 billion which has been wiped off property values over the past year.

Now we know the British public has had a long-standing love of property, but has the housing market collapse done anything to dampen your enthusiasm? Are we finally seeing the benefits of saving (tax-efficiently) into a pension plan, as the Government keeps hoping we will?

We polled lovemoney.com readers to find out what you think.

How are you saving for your retirement?

According to our survey, more than one in 10 (12%) of you are still using property as the only way of funding your lifestyle in retirement.

Now I don't know about you, but I find this figure quite alarming. After all, that's means a significant proportion of you are gambling your comfort and happiness in retirement on the performance of a single asset: your home.

Meanwhile, almost one quarter (23.8%) of you are using a combination of property and a pension to fund your retirement. I'm glad. Using a more diversified strategy to plan for retirement makes far more sense to me. By combining more than one approach, if one method under-performs you have a better chance of being able to fall back on the stronger performance of the other.

In the pension camp, almost one in five (17%) are saving in a traditional pension scheme only. A further 23% of you have a work-based pension which your employer is paying into on your behalf.

But sadly, despite our best efforts here at lovemoney.com to convince you otherwise, an alarming 7% of you aren't saving for your retirement at all.

Is property becoming less popular?

Surprisingly, given the recent housing market crash, more than one in 10 of you still think property is the best way to fund retirement, or are happy to use property and are confident it will provide you with a decent lifestyle in your twilight years.

Of course, not everyone is enamoured with the idea of using their property as a pension. In fact, one fifth of our readers believe it should be viewed as a home, rather than an investment.

The view from almost half (44.6%) of you is that property is a reasonably good way to fund retirement, as long as there are other sources of income or capital to rely on.  

Clearly, though, the British love affair with property as a long-term investment is still going strong - despite the challenges which have faced the housing market in recent months. Just take a look at our latest Property versus pensions video where you'll see for yourself that confidence in property hasn't waned at all.

Have falling house prices affected your retirement planning strategy?

We asked our readers who are using property as a pension, whether falling house prices have affected the way they're planning for their retirement. The table below outlines their responses:

As you can see, the majority of readers haven't wavered in their strategy at all, or have stuck it out regardless and now believe a house price recovery is on the cards.

I find this apparent unfailing faith in property fascinating. After all, just 1% of you have abandoned using your property as a pension completely, even though the property market has endured a dramatic collapse since late 2007.

So in other words, 99% of those of you who have invested in property, still think property is a good investment!

And less than one in five of you (17%) have started to bolster your retirement planning in other ways by, for example, saving in a pension, savings account or other investment.

How risky is property?

I suspect much of this optimism comes down to how risky we view property as a way of funding retirement. After all, more than half of lovemoney.com readers (50.4%) think that although there's some risk, house prices will always recover, and so using property as a pension remains an effective strategy.

But alarmingly, almost 8% of the people we polled don't think there's any risk at all. It's true using your home as a pension is a long-term strategy, and I think it's reasonable to suggest that over the long-term, house prices should recover from any troughs in the market. But this masks the potential problems in using property as the only means of financing your lifestyle once you have stopped working.

Let's say you're banking on sufficient appreciation in the value of your home, so that when you come to retire you can downsize and release enough capital to support the standard of living you want. But in the two-year period before you retire, the house price market collapses and the value of your home drops by say, 20%. (Sound familiar?)

So, what do you do now?  Sell-up anyway, accept the loss and hope you can still extract the capital you need? Or stay put until prices recover, even though you'll be cash-poor? Neither option is very appealing.

And that - drum roll please - is why having other strategies to save for your retirement as well as using your home is crucial, making you less vulnerable to a housing market downturn.

You should also bear in mind that property isn't a particularly liquid asset. You'll need to find a buyer first of all, and selling your home can sometimes be a lengthy process. You'll need cash to support you in the meantime whether that means continuing to work until your property is sold or falling back on any other sources of income or capital that you might have.

So I think you should be sensible, and save for retirement using a pension as well as a property. Whether you agree or disagree, I'd welcome your comments!