Homes earn £26,000 in a year for over-65s
12 December 2016
- Over-65 homeowners have property wealth of £1.031 trillion, Key Retirement Pensioner Property Index shows
- Average over-65 homeowner gains £2,300 a month since January
Retired homeowners have gained an average of £26,000 tax-free this year from their houses, new analysis* from leading over-55s financial specialist Key Retirement shows.
Total property wealth owned by over-65s who have paid off their mortgages grew to a new record high of £1.031 trillion in the past three months with average pensioner homeowners gaining more than £2,300 a month since January.
More than £114 billion has been added to the property wealth of the UK’s over-65 homeowners since the start of the year as the housing market continues to expand.
The strength of the housing market in 2016 has further boosted the long-term property investment success story - since Key started analysing over-65s housing wealth in 2010 total pensioner property wealth has increased by around 34% or £266 billion which is worth around £60,300 on average for every homeowner. Owning a home has been worth around £9,300 a year for over-65s.
Key’s Pensioner Property Index shows only Scottish over-65s suffered falls in the value of their total property wealth in the past three months with all other areas recording strong growth – Londoners made £15,445 each while homeowners in the South West were around £6,275 better off. Whilst Scotland experienced a fall it was relatively minimal at £276.
The overall growth in property wealth underlines the growing role investing in homes is playing in retirement and is helping drive the expansion of the equity release market with customers benefiting from record low rates. Average equity release customers** are taking out £75,900 in property wealth rising to £135,886 in London.
Dean Mirfin, technical director at Key Retirement.com said: “Property investment has earned £26,000 this year for over-65s homeowners highlighting the long-term benefits of owning a home.
“During a period of historically low interest rates and investment market volatility pensioners who have paid off their mortgages have been able to rely on steady tax-free returns from their home demonstrating the increasing importance of property to retirement planning.
“The equity release market is responding with new products and record low rates to enable more customers to make full use of their property investment and use their money for a wide range of purposes.”
The table below shows the 11 areas of Great Britain monitored by Key’s index with just over-65s in Scotland seeing price falls.
|Average change in value of home equity for homeowners aged 65+ (between September and November index)||Combined change in value of home equity for homeowners aged 65+ (between September and November index)|
|South East||increase of £3,460||+£2.269 billion|
|London||Increase of £15,445||+£3.407 billion|
|South West||increase of £6,275||+£3.931 billion|
|North West||Increase of £2,525||+£1.694 billion|
|East Anglia||increase of £7,219||+£3.407 billion|
|East Midlands||increase of £3,979||+£1.715 billion|
|West Midlands||increase of £5,553||+£1.990 billion|
|Yorks/Humbs||increase of £1,693||+£488.599 million|
|Scotland||£276 decrease||-£77.832 million|
|Wales||increase of £1,150||+£304.29 million|
|North East||increase of £743||+£204.325 million|
|GREAT BRITAIN||+£4,786||+£21.105 billion|
The table below shows over-65s in the North West are most likely to own outright with 671,000 having paid off mortgages compared with 656,000 in the South East.
|Estimated property equity in homes owned outright by people aged 65+ (November 2016)||Estimated percentage of total value of property equity belonging to people aged 65+ (November 2016)||Number of households in the region owned outright by people aged 65+|
|South East||£250.071 billion||19.87%||656,000|
|South West||£151.174 billion||14.65%||626,600|
|East Anglia||£130.861 billion||12.68%||472,000|
|North West||£101.216 billion||9.81%||671,000|
|East Midlands||£75.650 billion||7.33%||431,200|
|West Midlands||£64.709 billion||6.27%||358,400|
|North East||£34.433 billion||3.34%||275,000|
|GREAT BRITAIN||£1.031 trillion||4,409,400|