Homeowners could nearly double the amount of money they have on hand for retirement by using their property wealth, according to new analysis of Office for National Statistics (ONS) data by Legal & General Retail.
In the last five years, house prices in England and Wales have increased by 20%, to an average of £290,000.
The most significant growth has been in the East Midlands and Wales, where house prices have increased by an average of 26% and 25% respectively, adding more than £40,000 to the overall value of the average property.
PROPERTY BOOST
For older homeowners, property wealth could help to boost the amount of money available to fund their retirement. The average pension pot at the point of retirement for Legal & General drawdown customers is £72,000 but if they were to access their property wealth using equity release, for instance, they would receive an average of £69,600 (24%). This would create an overall retirement fund of £141,600.
This could improve the prospects of many pensioners by adding an equivalent of five additional years’ worth of retirement income, Legal & General Retail said.
REGIONAL PICTURE
While homeowners in London and the South East continue to have some of the highest value properties in the country, house price growth has plateaued in these areas in recent years. Meanwhile, homeowners in other areas of the country have seen significant increases in the value of their properties.
Areas like Blaenau Gwent (+49%), Merthyr Tydfil (+46%), Broxtowe (+39%) and Salford (+38%) are some of the most increased in terms of overall property values [top 20 listed below].
Lorna Shah, managing director, Legal & General Retail Retirement, said: “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.”
Top 20 local authorities with the biggest increase in house price values over the last five years
| Region | Local authority | House prices (2024) | Average equity release (24%) | Change in the last five years |
| Wales | Blaenau Gwent | £128,000 | £30,720 | 49% |
| Wales | Merthyr Tydfil | £137,000 | £32,880 | 46% |
| East Midlands | Broxtowe | £247,500 | £59,400 | 39% |
| North West | Salford | £220,000 | £52,800 | 38% |
| North West | Trafford | £350,000 | £84,000 | 37% |
| North West | Oldham | £180,000 | £43,200 | 36% |
| North West | Tameside | £195,000 | £46,800 | 36% |
| Wales | Neath Port Talbot | £155,000 | £37,200 | 35% |
| Wales | Caerphilly | £174,975 | £41,994 | 35% |
| North West | Manchester | £235,000 | £56,400 | 34% |
| East Midlands | Leicester | £232,000 | £55,680 | 34% |
| East Midlands | Gedling | £240,000 | £57,600 | 33% |
| North West | Bolton | £180,000 | £43,200 | 33% |
| West Midlands | Sandwell | £200,000 | £48,000 | 33% |
| West Midlands | Wolverhampton | £200,000 | £48,000 | 33% |
| East Midlands | Nottingham | £186,500 | £44,760 | 33% |
| Wales | Isle of Anglesey | £225,000 | £54,000 | 32% |
| North West | Bury | £225,000 | £54,000 | 32% |
| West Midlands | Dudley | £218,000 | £52,320 | 32% |
| North West | Rochdale | £178,000 | £42,720 | 32% |
