Equity release adviser Key Retirement Solutions has tracked the amount of equity held in property by over- 65s in 11 areas of the UK.
It found a third is owned by pensioners in London (£125bn) and the South East of England (£122bn) who have paid their mortgages off.
However, pensioners have suffered losses as the housing market has stalled with £6.38bn dropping off house prices in the six months to April this year – an equivalent of £1,595 per household.
Homeowners in Scotland and Wales were the worst hit with losses of £11,946 and £5,334 on average while retirees in the South West suffered losses of £1,889 on average. In total, pensioners are £24bn down since May 2010 when total property value was worth £767bn.
Dean Mirfin, group director at Key Retirement Solutions said over 65s viewed their housing wealth differently to the younger generation:
“It’s more what did they pay for their house versus what is it worth today. So the psychology among the older generation is they are concerned about what their properties are worth today, they’re less focussed on what’s happened in the short term.”
Despite the downturn, some areas have seen a rise in house prices – with the biggest gains recorded in the East of England where over-65s are £1,608 better off.
Pensioners in London, the South East and the East Midlands have also seen their property value increase.
Mirfin has seen an increase in equity release queries based on property value. He said: “We’ve had call after call from people who say, ‘I’ll wait until property prices improve.’ And then we have a conversation with them about how much they’re looking to borrow, and there’s no correlation in that a person will say, ‘I’m after £40k’ and you’ll say ‘even based on its current value, you can borrow up to £90k.”
When asked whether equity release was preferable to selling property in a downturn, he said: “There will be some people doing equity release now who may well downsize when the market changes. Because the loans are portable at the time of downsizing, they can either take the loan with them, or pay it off. For people who don’t want to sell but have a need when the market is low, it’s a way they can buy themselves some time.”
