Available equity in UK homes exceeds £650bn

Equity available for release in UK homes exceeded the £650bn mark for the first time in the first quarter of 2021, new analysis from Canada Life has revealed.

This was an increase of £50bn based on the final quarter of 2020.

The figures, based on the latest Halifax House Price Index, showed that the total amount of housing equity available to homeowners aged 55 and over now stands at an estimated £650.7bn.

Canada Life suggested that higher house prices in the South East, London and the South West have driven the 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, which is 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, up by 3.6% and 2.8% respectively. Wales now has almost £25bn of potential equity available, or just under £60,000 per household while Scotland has just over £40bn available, or £58,000 per household.

The analysis also revealed that homeowners in the North East and Yorkshire had the least amount of equity available, with £47,421 and £56,778 per household respectively.

Canada Life head of marketing, insurance, Alice Watson, said that the equity release market has shown “great resilience” over the last year.

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

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