Cooling housing market conditions see equity release payouts reduce by £12K since last year

Over-50s property specialists, Regency Living, reveals that people who are taking equity release from their properties are, on average, £12,400 worse off today than they were last year as the recent indications of house price recovery are yet to have a positive impact at the higher end of the property market.

Regency Living has analysed how the average price of homes that are being used for equity release has changed over the past 12 months, and how this relates to price changes in the wider UK housing market over the same period of time.

The data reveals that while the average house price in the UK has remained fairly static over the past year, the value of more expensive properties - which are commonly used for equity release among older homeowners - has actually seen a significant decrease.

Over the past year, the average UK house price has increased by 0.2%, rising from £280,604 to £281,224.

Meanwhile, the average price of homes that have been used for equity release has decreased by -3.3%, dropping from £376,949 to £364,586. This is an average cash drop of -£12,363.

This means that older homeowners who are looking to release equity in their home in order to free up cash for other areas of their life are essentially going to be almost £12,400 worse off this year than they would have been last year.

London has seen the largest price drops for equity release homes, falling by -9.9% on the year, followed by the East of England (-8.3%), and the South East (-4.1%).

There are, however, five regions in which homes at the higher end of the market have seen positive price change over the past year.

In the East Midlands, the average price of equity release homes has grown by 5.4%, followed by Scotland (2.6%), Yorkshire & Humber (0.9%), the North East (0.7%), and the North West (0.2%).

A Regency Living spokesperson commented:

"Despite the UK market showing early signs of recovery after a difficult few years for house prices, this positivity is yet to impact the higher end of the market. This means that your typical equity release home - usually at the higher end of the price spectrum due to homeowners being older and therefore more established on the market - has still seen its value decline.

Equity release is an option usually taken by homeowners who want to free up some cash to fund another aspect of their life. This might be money to fund retirement plans, or to help younger members of their family to get on the housing ladder. Whatever the reason, they're worse off today than they were a year ago.

Instead of equity release, which usually forces you to take a new loan on your home, another way of freeing up some of your cash wealth is to actually downsize to a smaller, more affordable property.

This is a trend we're seeing in the park home market - silver downsizers and retirees are opting to sell their family homes and move to a park home, instantly freeing up hundreds of thousands of pounds to be spent as they wish."