Securing a decent retirement income can be a key concern for a lot of retirees, so it's encouraging to hear that average property wealth amongst pensioners is substantially increasing. In fact, figures from Key Retirement Solutions (KRS) have revealed that the average retired homeowner has seen their property wealth grow by over £7,100 over the last year alone – a significant sum, and one which could well be put to good use.
Thanks to there being so much untapped property wealth floating around, it's no wonder equity release is coming back into favour. Retirees are realising the potential of unlocking some of the value of their property, with them able to generate an average of nearly £600 per month from their home – highlighting how property wealth can help improve standards of living in retirement. Moneyfacts is home to an equity release planning service (find it here) which could be a great way to discuss your options and see if it's a suitable solution.
"With retirement incomes being squeezed at a time when pensioners are expected to fund a retirement that could last three or even four decades, the growing property wealth available to retired homeowners could prove a vital lifeline," said Richard Eagling, head of pensions at Moneyfacts. "Using equity release to unlock housing wealth looks set to become a much more common choice amongst those elderly homeowners looking to supplement their retirement income."
The figures show just how popular equity release is becoming, as well as the potential such a solution can offer. 2013 was a record year for the industry with over £1 billion being released, while additional KRS figures show that the combined property wealth of those aged 65+ totals some £801 billion – an increase of £33 billion in the last 12 months, largely thanks to property prices soaring across the UK, with this being the highest figure since KRS began recording this measure in 2010.
There are still regional variations, however. As might be expected, homeowners in London were the biggest winners by gaining more than £41,200 in the past year, with total property wealth in the capital being over £147 billion. Some regions posted slight drops – those in the North West saw their average property price fall by £722 over the year, for example, with those in the North East losing £708 – but despite this the overall figure is overwhelmingly positive, with growth in property prices underlining the success of the equity release market.
The combination of falling annuity rates and a lack of pension saving means retirement incomes have become increasingly squeezed for many, so this level of property wealth could give pensioners a much-needed helping hand. Those who own their home outright can take advantage of the amount of equity they've built up over the years, and this is one section of the market where rising house prices are only a good thing.
Although younger homeowners might fear that a large mortgage will mean they'll never get to that stage, the right combination of a competitive mortgage deal and careful budgeting can leave them in good stead for the future, ideally adding to the amount of property wealth in years to come.
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