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Pensioner property wealth up £9.24bn so far this year

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.

Region

Average change in value of home equity for homeowners aged 65+ (between end-January and May index)

Combined change in value of home equity for homeowners aged 65+ (between end- January and May index)

London

increase of £20,688

+£7.571bn

South East

increase of £5,148

+£3.377bn

South West

increase of £951

+£595.4m

North West

£134 decrease

-£89.588m

East Anglia

increase of £2,152

+£1.015bn

East Midlands

increase of £3,048

+£1.314bn

West Midlands

£2,203 decrease

-£789.48m

Scotland

£8,536 decrease

-£2.407bn

Yorks/Humbs

£3,651 decrease

-£1.053bn

Wales

increase of £441

+£116m

North East

£1,488 decrease

-£338.2m

GREAT BRITAIN

+£2,096

£9.242bn

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. 

Region

Estimated property equity in homes owned outright by people aged 65+ (May 2016)

Estimated percentage of total value of property equity belonging to people aged 65+ (May 2016)

Number of households in the region owned outright by people aged 65+

London

£195,731bn

21.13%

366,000

South East

£174,974bn

18.89%

656,000

South West

£123,493bn

13.33%

626,600

East Anglia

£104,306bn

11.26%

472,000

North West

£77,848bn

8.4%

671,000

East Midlands

£60,462bn

6.53%

431,200

West Midlands

£50,365bn

5.44%

358,400

Scotland

£44,893bn

4.83%

282,000

Yorks/Humbs

£35,163bn

3.8%

288,600

Wales

£32,339bn

3.49%

264,600

North East

£26,834bn

2.9%

275,000

GREAT BRITAIN

£926,413bn

 

4,409,400

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