UK property equity surges to new record as house prices recover with falling rates

The value of the UK’s property equity is higher than ever before having surged to almost £6 trillion, new research has revealed.

The study by the Equity Release Council calculated that recovering house prices helped to increase the figure to an “unprecedented” £5.7 trillion in the three months ending June 30, 2024.

This was up from £5.4bn in the same period last year and also surpassed the previous high of £5.6 trillion recorded in the second quarter of 2022.

As a result, UK property is currently leveraged at its lowest rate since before the 2008 financial crisis.

The study showed that the nation’s total mortgage debt was around £1.6 trillion, compared with an overall property market value of £7.3 trillion.

This gives an average loan-to-value (LTV) of just 22. per cent, with the remaining 78 per cent of the housing market effectively owned in equity or cash.

Jim Boyd, chief executive of the Equity Release Council, said: “While we haven’t seen double digit growth in house prices this year, we have seen the property market start to recover which has pushed the total value of unmortgaged residential property in the UK to over £5.7 trillion.    

“Much of this is in the hands of the older generation and our findings make it crystal clear that your prospects of living comfortably in retirement will rest on firmer foundations if you own your own home and include property wealth in your financial plans.

“Spare funds aren’t easy to come by in the current climate, either for households or for government so it’s vital that we help older homeowners consider the role that the £3.4 trillion worth of property wealth can play in later life finances. 

Property equity ‘dwarfs’ pension spend

The data also highlighted the “untapped potential” of property wealth to help support the UK’s older population at a time when public sector funds are squeezed. 

About 55 percent of UK homeowners are over 55 years old, holding an average property equity of £321,213 in their home, with that figure rising to £583,618 in London.

The findings mean over-55 homeowners own property wealth worth more than 22 times the £152bn the government is billed to spend on pensioner benefits during 2024/25, according to the Office for Budget Responsibility.

Jim Boyd, CEO of the Equity Release Council, said: “While we haven’t seen double digit growth in house prices this year, we have seen the property market start to recover which has pushed the total value of unmortgaged residential property in the UK to over £5.7 trillion.    

“Much of this is in the hands of the older generation and our findings make it crystal clear that your prospects of living comfortably in retirement will rest on firmer foundations if you own your own home and include property wealth in your financial plans.

“Spare funds aren’t easy to come by in the current climate, either for households or for government so it’s vital that we help older homeowners consider the role that the £3.4 trillion worth of property wealth can play in later life finances. 

“We urge the new government to look beyond pensions to improve retirement incomes and stimulate the economy.

“There is a compelling need for government to set out its vision for property wealth in later life funding: a thriving later life mortgage market can help to achieve both of these outcomes.”