Retired homeowners earn £3,000 from their houses
09 February 2020
Retired homeowners saw their property wealth increase by more than £3,150 in the past year despite the impact of political and economic uncertainty on the housing market, analysis* from UK’s leading independent equity release adviser Key shows.
Total property wealth owned by over-65s who have paid off mortgages is valued at £1.133 trillion and has increased by £14.78 billion in the past year which equates to a gain of £3,152 for average retired homeowners, Key’s Pensioner Property Equity Index reveals.
Key’s data shows the total value of pensioner property fell to £1.096 trillion in the early part of last year before recovering in the autumn to £1.132 trillion. Gains since the autumn have been modest but retired homeowners have still seen strong year-on-year increases.
The long-term gains have been even more impressive. Since Key started analysing the mortgage-free property wealth of the over-65s in 2010 retired homeowners have benefited from growth of 45% - a total of nearly £354 billion - earning them gains of £75,000 in the past 10 years.
The biggest winners in the past year are over-65s in Wales who have seen gains of £11,700 while retired homeowners in the West Midlands (£8,165), East Midlands (£5,799) and the North West (£4,355) have also done better than average.
The only region to suffer substantial falls was East Anglia where retired homeowners are £3,267 worse off over the year. Homeowners in the South East saw marginal price falls of £149 over the year.
The South East still accounts for nearly a fifth (18.9%) of all property wealth held by retired homeowners despite the slight drop while East Anglia is the fourth-wealthiest region in terms of mortgage-free property held by over-65s.
Will Hale, CEO at Key said: “Political and economic uncertainty hit the housing market last year but there were genuine signs of recovery towards the end of last year and retired homeowners who no longer have mortgages were big beneficiaries.
“Interestingly it was the over-65s in Wales who made the biggest gains – seeing the value of their property increase by nearly £1,000 a month – while those in East Anglia and the South East saw modest falls. While it is useful to be aware of market fluctuations what happens on a monthly basis is unlikely to alter the simple fact that millions of over-65s retain considerable property wealth which can transform their standard of living in retirement and enable them to address a wide range of financial issues.
“Increasingly, we are seeing people choosing to access property wealth in retirement and using modern lending features to suit their individual circumstances. Choosing to use drawdown rather than lump sum and to repay the interest rather than letting it roll up make these products even more flexible and attractive than before.”
The table below shows the detailed picture across Great Britain with nine areas seeing growth and two recording losses.
|Average change in value of home equity for homeowners aged 65+ (past year)||Combined change in value of home equity for homeowners aged 65+ (past year)|
|South East||Down £149||Down £97.744 million|
|London||Up £1,849||Up £676.734 million|
|South West||Up £3,591||Up £2.250 billion|
|North West||Up £4,355||Up £2.922 billion|
|East Anglia||Down £3,267||Down £1.542 billion|
|East Midlands||Up £5,799||Up £2.500 billion|
|West Midlands||Up £8,165||Up £2.926 billion|
|Yorks/Humbs||Up £1,784||Up £514.862 million|
|Wales||Up £11,700||Up £3.095 billion|
|Scotland||Up £3,290||Up £927.28 million|
|North East||Up £2,228||Up £612.700 million|
|GREAT BRITAIN||Up £3,152||+£14.787 billion|
The table below shows more over-65s in the North West have paid off mortgages with 671,000 owning their homes outright compared with 656,000 in the South East and 626,000 in the South West.
|Estimated property equity in homes owned outright by people aged 65+||Estimated percentage of total value of property equity belonging to people aged 65+||Number of households in the region owned outright by people aged 65+||Number of over-65s households in the region|
|South East||£214.273 billion||18.9%||656,000||1,130,300|
|South West||£162.764 billion||14.36%||626,600||787,000|
|East Anglia||£137.484 billion||12.13%||472,000||782,690|
|North West||£113.641 billion||10.02%||671,000||873,590|
|East Midlands||£85.287 billion||7.52%||431,200||591,900|
|West Midlands||£73.198 billion||6.46%||358,400||701,270|
|North East||£35.945 billion||3.17%||275,000||335,430|
|GREAT BRITAIN||£1.133 trillion||4,691,400||7,610,270|
Anyone looking to release equity from their home can get Key’s independent guide to equity release by calling 0800 531 6027 or visiting https://www.keyadvice.co.uk/equity-release/is-it-right-for-me
* Key’s Pensioner Property Equity Index tracks the amount of equity held in property by people over 65 years old in Great Britain. Figures are based on analysis of data from the ONS Family Spending Report (2014), the UK House Price Index, Registers of Scotland House Price Statistics and ICM (2019) and Key’s UK Equity Release Market Monitor.