Recovering house prices in the first half of the year have boosted the total value of the nation’s property equity to an “unprecedented” £5.7trn, analysis by the Equity Release Council has found.
The analysis, which examined the “untapped potential” of property wealth to support the older generations, showed the latest figure surpasses the previous high of £5.6trn from mid-2022.
This was when the housing market was buoyed by pent-up demand after the pandemic.
Equity Release Council CEO, Jim Boyd, pointed out the market hasn't seen double digit growth in house prices this year.
However, the industry has seen the property market start to recover which has pushed the total value of unmortgaged residential property in the UK to over £5.7trn.
“Much of this is in the hands of the older generation and our findings make it crystal clear that your prospects of living comfortably in retirement will rest on firmer foundations if you own your own home and include property wealth in your financial plans,” he added.
“Spare funds aren’t easy to come by in the current climate, either for households or for government, so it’s vital that we help older homeowners consider the role that the £3.4trn worth of property wealth can play in later life finances.
“Whether it is boosting income, managing unsecured debt, paying for care or helping to get family members onto the property ladder, there is a huge amount of potential tied up in bricks and mortar.”
Boyd said financial advisers should ensure, when speaking to clients, the role of property is discussed even if the right approach is ultimately to look at other options.
“We need to encourage informed choices rather than simply relying on what works for previous generations,” he added.
The analysis additionally detailed the total UK mortgage debt of £1.6trn compares with an overall property market value of £7.3trn.
This gives an average loan-to-value ratio of just 22.2 per cent, with the remaining 77.8 per cent of the housing market effectively owned in equity or cash.
The average LTV has dropped from 28.9 per cent ten years ago, and means for every £10,000 of property owned, £7,720 is backed by cash, with mortgages covering only a minor share.
Nationally, the figures mean homeowners over-55 in Britain own property wealth worth more than 22 times the £152bn which the government will spend on pensioner benefits during 2024/25.
For households, the £321,213 of equity in the average UK over-55s homeowner’s property is worth almost 10 times the average pensioner couple’s annual net income of £38,168.
The contrast highlights how private property wealth can play both a personal and policy role to help meet later life living costs and welfare needs for the ageing population.
tom.dunstan@ft.com
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