The over-55s in England have more wealth locked-away in their homes than the entire annual GDP of Italy.
According to research commissioned by retirement income specialist Age Partnership, homeowners in England aged 55 and over currently own £1.5 trillion worth of property, £0.1 trillion more than Italy’s annual GDP.
With the average cost of a house in England currently standing at £229,383 and 6.3 million over-55s owning their home outright, the £1.5 trillion figure puts English over 55s as some of the most property rich in the world.
The GDP figures from the International Monetary Fund (IMF), also highlight that the over-55s are above Brazil and Spain for property wealth by £0.3 trillion and £0.6 trillion respectively.
The research also shows the long term growth pattern of over 55s property wealth, with the forecasted figure for 20 years’ time standing at £2.9 trillion in England alone.
The 20-year forecast is calculated using a modest annual house price increase of 2% and also takes into account the number of over 55s in England increasing by 5.3 million between 2016 and 2036. Even without any house price inflation, demographic changes alone would take the total housing wealth of over 55s in England to £1.9 trillion over the same time period.
As the large baby-boomers generation is expected to live longer the number of people aged 55 or older in England is expected to rise from 16.2 million to 21.5 million by 2036. Many within this generation are owner occupiers who have benefitted from house price inflation and over a third of English over-55s (39%) currently own their home with no outstanding mortgage.
In addition to the figures within this research, there are many over 55s who don’t yet own their home outright but have significant wealth held in their properties – meaning the £1.5 trillion figure is actually a conservative estimate.
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.
“Over the next 20 years housing wealth will become increasingly important, as the baby-boomers generation reach retirement en-masse. We are forecasting that with only modest growth to property values, £2.9 trillion will be held in property wealth in England in two decades time – these sort of figures just can’t be ignored.
“Pensions will continue to cause a headache as the population ages. Adding property wealth to the mix could help alleviate that pressure. Equity release is already taking a starring role as it provides an alternative to downsizing but still enables over-55s to release cash from their homes.
“The FCA’s recent manoeuvre to relax the rules for providers who offer innovative lifetime products is a really positive step forward in recognising the importance of the equity release market and acknowledging the increasing consumer demand. As people continue to look for new ways to access their existing cash and assets as they reach retirement, keeping ahead of the curve will allow a more efficient and transparent process for all those involved.”
