Retired homeowners have seen their property wealth grow by more than £12.5bn in the past three months as house prices continue to climb, earning the average pensioner nearly £900 a month, new analysis shows.
According to equity release specialist Key Retirement’s Pensioner Property Index, homeowners aged over-65 now own property wealth of £873.8bn outright.
Pensioners who own their homes outright have gained an average of £2,680 each from their houses in the past three months taking their property wealth to a “new record high”.
In the five years since Key started monitoring the housing wealth of the over-65s in January 2010, total pensioner property wealth has increased by 12 per cent or £93.85bn, which equates to £20,000 on average for every homeowner.
Retired homeowners in London were the biggest winners gaining an average of around £16,260 each in the past three months, while homeowners in Scotland are more than £8,650 better off and pensioners in Yorkshire and Humberside are £4,063 better off.
However, retired homeowners in Wales saw a fall in housing wealth with average losses of £2,230 in the three months while the north west and West Midlands also saw house price falls.
The growth in property prices will drive expansion of the equity release market which enables homeowners to release wealth from their homes, Key Retirement claimed.
Earlier this year, Legal and General entered the equity release market by acquiring New Life Home Finance for £5m.
Following this, Bower Retirement Services acquired Sixty Plus, an independent financial adviser firm which specialises exclusively in equity release, and fully integrated the firm into its business.
Dean Mirfin, technical director at Key Retirement, said: “No matter what happens in the property market homeowners will always have a major asset which should be considered as part of retirement planning. Innovation in the equity release market and the launch of pension freedoms are opening up more ways for homeowners to use their property wealth.
“Retired homeowners, and those approaching retirement, should take advice on how their property wealth can generate additional capital and/or income.
“Advisers and lenders need to focus on a holistic approach to retirement planning which ensures that property wealth is considered alongside pension savings and other investments.”