Homeowners in England and Wales could release an average of £69,600 in equity from their properties—a 20 per cent increase over the past five years.
This is according to a new analysis by Legal & General Retail, based on data from the Office for National Statistics. It found that the significant rise in property wealth offers an opportunity to bolster retirement savings, potentially extending retirement income by five years.
According to data from Legal & General, a combined retirement fund of £141,600 could be created by accessing an average of £69,600 through equity release and the average pension pool of £72,000. For many, this extra financial flexibility means five more years of retirement income.
Over the past five years, the average price of a home in England and Wales has increased by 20 per cent to £290,000. Growth has been particularly noticeable in areas like Wales and the East Midlands, where average home values have increased by more than £40,000, with increases of 25 per cent and 26 per cent, respectively.
Areas like Blaenau Gwent, up 49 per cent, Merthyr Tydfil, up 46 per cent, Broxtowe, up 39 per cent, and Salford, up 38 per cent, have witnessed some of the strongest rises in property wealth across the UK, despite the fact that property prices in London and the South East have plateaued recently.
These numbers highlight a change in the areas where homeowners are getting the best returns on their real estate investments.
Legal & General retail retirement managing director Lorna Shah says: “Many retirees are not able to maintain the lifestyle they want with their existing pension pots alone. This will only become a greater challenge as people live longer and have to meet increased costs, such as those associated with residential care. Property wealth, using products like equity release, could increasingly be integrated into retirement planning in the future, as a larger number of homeowners turn to the value held in their bricks and mortar to bolster their retirement funds.
“If more people look to property wealth to fund their retirement, this could have interesting regional implications, as local house price fluctuations impact how much homeowners have at their disposal. Some areas of the country might end up taking a greater proportion of their retirement funds from their homes as a result.”