English homeowners aged 55+ have equity worth more than GDP of Italy

Posted 18 October 2016 by Ben Salisbury

New research shows that the total equity that over 55's from England have in their property, £1.5 trillion, is higher than the total GDP of Italy...

English property owners aged over 55 have more equity wealth in their homes than the entire annual GDP of Italy, according to new research from retirement advisors, The Age Partnership.

It found that a total of £1.5 trillion of equity is locked up in these properties, compared to Italy’s annual GDP of £1.4tn. It is also higher than the entire GDP of Brazil at £1.2tn and Spain at £0.9tn.

The average property in the UK now costs £229,383 and there are 6.3 million over 55’s who own their own home outright.

The property value that the over 55’s are sitting on is comprised by 39% of that age group having no outstanding mortgage, though many more will have a considerable amount of equity in their properties, which means this is a low estimate.

The figure is likely to grow still further because the population in England reaching that age is forecast to grow by a third over the next two decades, meaning that by 2035, the figure will have ballooned to £1.9tn, after house price inflation.

The research comes as a survey commissioned by McCarthy and Stone, carried out by YouGov on over 65’s found that 36% want to downsize to a smaller home but can’t because there is a shortage of homes like bungalows for older people to move into.

15.7% of people surveyed who are looking to move home live in the south-east of England, equating to £122.6bn of property wealth.

The research confirms that many over 55’s are reaping the benefits of the house price boom of the last 20 years. Growing numbers of this group are using equity release to utilise some of their property wealth to help buy a more suitable home for retirement or to fund their retirement.

Simon Chalk, equity release expert at Age Partnership, said: “A small fortune is locked away in the houses owned by the older generation in England. The total property wealth of over-55s is already in the trillions – it even tops the GDP of Italy.

“This stored wealth cannot be ignored: housing must become a primary part of retirement financial planning and we need to open up more channels to help over-55s benefit from it.”

Equity release is one way of accessing wealth tied up in property to pay for retirement or other things but it is seen as a controversial option because debts are compounded and loans can grow quickly. Interest rates can also be very high, often around 5%-6%, which are much higher than the rates available now and over the last five years that are linked to mortgage products.

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