Equity in UK homes reaches all-time high

Research and analysis conducted by Canada Life, the assurance and financial services organisation, shows that UK homeowners now have over £740 billion of available equity release.

Canada Life’s analysis of figures for Q3 2021, taken from the Halifax price index, show that this is the first time that available equity release has reached such a high amount, and is an increase of over £10 billion on last quarter’s figures.

Equity increases are reflected across all UK regions with the South and Scotland showing the most aggressive growth. Average house prices in the South East are now standing at £360,000, creating £143 billion of potential equity for the region, which is the largest available equity by region in the UK. London follows closely with £136 billion of potential equity.

The report shows that London still has the highest levels of average equity available at £178,680 per household. The South East follows with average equity at £126,278 and East Anglia at £108,732. Whereas in the North East and Yorkshire, homeowners had the least amount of equity available, with £54,489 and £65,385 per household respectively.

Scotland now has over £45 billion of potential equity available, equating to around £66,000 per household. In the East Midlands there is now over £46 billion available, approximately £76,000 per household and in East Anglia almost £85 billion of available equity, or £108,000 per household.

Properties in Scotland, the East Midlands and East Anglia enjoyed the largest price increases in Q3, growing by 2.8%, 2.4% and 2.2% respectively. House prices in the North West saw no change (unsurprising following a spurt of 3.4% in Q2), while London declined slightly by 0.1%. This brings the average house price in the capital down to £500,000 from £510,000.

Alice Watson, Canada Life head of marketing, commented on the analysis:

“With the exception of a very minor decline in London, house prices are continuing their almost relentless growth across Britain which we can see mirrored in the available equity.”

“Households across the nation are looking at property wealth in a different way. To see them as a contributing part of their retirement income rather than a completely separate asset.”

“Whilst releasing equity from a property remains a very significant and individual decision it has a valuable role to play in helping today’s homeowners live the retirement they’ve worked long and hard for. With the right advice, equity release has proven it can help people to access their property wealth flexibly and safely.”

Jim Boyd, CEO of the Equity Release Council also commented:

“Equity release products may be designed for later life, but these figures show the benefits of accessing property wealth are routinely shared across the generations and increasingly woven into the country’s social fabric.”

A significant amount of funds continue to pass directly to family members and other beneficiaries, making equity release a multi-generational financial planning tool. The ability to ‘recycle’ housing wealth is transformative for many families when it comes to younger generations’ ambitions to progress in life, from buying a home and getting married to continuing in education and starting a business.”

“Unlocking property wealth is not the right choice for everyone, and one of the great benefits of the equity release advice process is that it frequently unearths other solutions, from savings or investments to unclaimed pensions or benefit entitlements. With longer lives, people’s needs change over time and the questions prompted by considering equity release can help identify the best way to use different sources of wealth at different stages of life.”

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