Total property wealth owned by over-65s who have paid off their mortgages grew to a record high of £1.031 trillion in the past three months with average pensioner homeowners gaining more than £2,300 a month since January.
Key Retirement’s pensioner property index tracks the amount of equity held in property by people over 65-years-old in Great Britain.
Key Retirement's figures, which show more than £114bn 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, are based on analysis of data from the Office for National Statistics Family Spending Report 2014, the UK House Price Index, Registers of Scotland House Price Statistics and ICM (2014) and Key Retirement’s UK Equity Release Market Monitor.
The strength of the housing market in 2016 has further boosted the long-term property investment success story.
Since Key Retirement started analysing over-65s housing wealth in 2010 total pensioner property wealth has increased by around 34 per cent or £266bn, 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.
The 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, while Scotland experienced a fall it was relatively minimal at £276.
According to Key Retirement, 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.
Average equity release customers are taking out £75,900 in property wealth increasing to £135,886 in London, with the overall growth in property wealth underlining 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.
Dean Mirfin, technical director at Key Retirement, 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.
| Region | Average change in value of home equity for homeowners aged 65+ (between Se 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 |
Principal of North-England based Middleton Finance Daniel Bailey said he has experienced an increase in equity release enquiries this year mainly from retired home owners who are asset rich but have very small pension provisions.
He said: "Many are looking to raise funds to supplement there retirement income or provide funds for their children.
"Increase in property value has played its part in the increase in equity release business along with lack of pension income. More providers are entering the market and providing more competition which ultimately will benefit the consumer with more competitive rates."
ruth.gillbe@ft.com
