Retired homeowners have seen the average value of their property rise by £500 a month since the start of this year thanks to rising property values, new figures show.  

Research into the total property wealth held by over-65s by financial specialist Key Retirement has found that retired homeowners have seen their property wealth increase by £9.24bn since the end of January, as overall pensioner property wealth hit a staggering £926.41bn outright, highlighting the growing importance of investment in residential property for retirement planning.

Unsurprisingly, analysis of the Key Retirement’s Pensioner Property Index, which tracks the amount of equity held in property by people over the age of 65 in Great Britain, shows that the biggest gains were unsurprisingly witnessed in London where over-65s have made almost £21,000 – ten times the national average.

In stark contrast, Scottish pensioners have seen losses of more than £8,500.

Pensioners who own their homes outright have earned an average of £2,096 tax-free each from their properties since late January taking their property wealth to a new record high.

Longer term examination of the figures, which come from the ONS Family Spending Report (2014), the Land Registry House Price Index, Registers of Scotland House Price Statistics and ICM (2014) and Key Retirement’s UK Equity Release Market Monitor, reveal that over the past six years, the over-65s total pensioner property wealth has risen by around 21%, or £161bn, which is worth around £39,000 on average for every homeowner.

Dean Mirfin, technical director at KeyRetirement.com, said: “Property wealth is a huge asset for pensioners and is making a massive contribution to standards of living in retirement reflecting the success of investing in a home.”

The rise in pension wealth is reflected in the continuing expansion of the equity release market with customers releasing property wealth taking around £76,000 on average rising to more than £134,000 in London.

“The contrast between the average £76,000 that can be generated from property wealth and the value of average pension savings underlines how vital it is to seek independent expert advice on how to use housing wealth,” added Mirfin.

The index reveals major differences in the property market across the country with six regions – London, the South East, Wales, the South West, East Anglia and the East Midlands still seeing strong growth.

“The different housing markets around the country show prices do vary but the long-term story is that property wealth is still growing as highlighted by our research which began in 2010,” Mirfin concluded. 

The table below shows the 11 areas of Great Britain monitored by Key’s index with five seeing price falls; Scotland, Yorkshire & Humberside, the North East, the West Midlands and the North West.

The table below shows over-65 homeowners in the North West are most likely to own their home outright – Key’s analysis shows 671,000 own their homes without mortgages compared with 656,000 in the South East.