House prices vs retirees’ income

House prices grow at nearly double the rate of retirees' income

House prices have risen nearly twice as fast as UK retirees' income in the last fifteen years, recent research by the Equity Release Council revealed. Data from the Land Registry and Office for National Statistics show house prices have soared by 91% since 1997 to £229,610. In contrast, the average retiree's income has risen by just 46% from £13,786 to £20,129.

Although recent instability within the property market permitted retirees' incomes to regain some ground on house prices in terms of their rate of increase, property's overall growth rate remains higher in the longer term. Despite property values falling by 8% in real terms over the last five years and retirees' income increasing by 4%, income failed to rival the overall growth rate of property values since 1997.

One answer to this is to use the equity in one's home as an additional source of income. Property is now very often people's biggest and most secure financial asset, with a far greater return on their original investment. This is especially true for those who have remained in the same home for a number of years, during which the property market has boomed, meaning they have accumulated a large amount of equity in their property.

Equity release can provide access to this tied-up cash as an alternative to selling, allowing owners to remain in their own home while relieving financial pressure. Either a lump sum or a reserve facility to draw down extra cash as or when needed can be arranged. Specialist equity release advisers can help customers choose which source of retirement income would best suit them.


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