Property News

Equity in UK Homes Exceeds £650bn for First Time

Equity in UK Homes Exceeds £650bn for First Time

The equity available for release in UK homes exceeded £650bn for the first time in Q1 2021, according to Canada Life.

The figures, based on the latest Halifax quarterly regional house price index, revealed that the total amount of housing equity available to homeowners aged over 55 now stands at an estimated £650.7bn; this is an increase of £50bn from the previous quarter.

An increase in loan-to-values (LTVs) across Canada Life’s product range and a marginal increase in house prices can be attributed to the rise in the amount of equity available.

Higher house prices in the South East, London and the South West has driven this surge in potential available equity.

The average price of a property in the South East is now £345,000, creating £125bn of potential equity for the region or just over £110,000 per household, the largest available equity by region in the UK.

This was closely followed by London which now has £123bn of potential equity or £161,276 per household.

Property prices in Wales and Scotland have also witnessed the largest percentage growth in house prices in Q1, growing by 3.6% and 2.8% respectively.

Wales now has almost £25bn of potential equity available, or just under £60,000 per household.

While in Scotland just over £40bn is available, working out at £58,000 per household.

Homeowners in the North East and Yorkshire had the least amount of equity available, with £47,421 and £56,778 per household respectively.

Alice Watson, head of marketing and insurance at Canada Life, said: “The equity release market has shown great resilience over the last year and is continuing to thrive as more and more people see the benefits of accessing their property wealth in retirement.

“Homeowners across the country are seeing increasing strains on their personal finances whether that’s from redundancy, rising living costs or caring responsibilities.

“The diverse nature of equity release products mean that they can be used to meet a range of evolving needs, while offering a combination of certainty and flexibility.

“Fewer people are able to follow the ‘traditional’ journey of retiring with a comfortable pension and no mortgage debt, and as a result, the retirement market is undergoing a significant change.

“Whilst releasing equity from a property remains a significant decision, personal finances are likely to continue being exacerbated by the pandemic and, with the right advice, equity release has proven it can help people to access their property wealth flexibly and safely.”