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Pension reforms could plug £1.2bn each year into housing

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  • 15/04/2015
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Pension reforms could plug £1.2bn each year into housing
Some £1.2bn could be invested into the housing market annually over the next 10 years by people aged 55 to 64 off the back of the pension reforms, Savills research has estimated.

Research published by the estate agent estimated that 29% of people aged 55 to 64 have a current defined contribution (DC) pension with an average pot of £25,000, totalling £120bn for the age group.

However, Savills said the skewed distributions of pension wealth meant only the top 7% of these pension holders would be able to afford to buy an average priced property outright, setting them back around £180,000.

In total it said 10% of DC pension wealth could be plugged into the housing market by pensioners aged 55-64, giving a possible investment of £1.2bn when split over 10 years.

Savills pointed out that using these estimates, pensioners’ contribution to the market would equate to just 0.5% of recent market turnover and around 10,000 transactions per year.

Neal Hudson, Savills research, said: “At these levels, the reforms will have a limited effect on national house prices, but we may see a short-term burst of activity in lower value markets.

“With many of the wealthiest pension holders living in London and the south of England, it remains to be seen how many will want to deal with the hassle of investing outside of their local markets.”

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