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TODAY'S OTHER NEWS

Property still beats a pension, new figures show

When it comes to saving for retirement, many of us are split on whether property or a pension is the best way to invest, but while both have their merits, new figures from Key (formerly Key Retirement) would suggest that property almost certainly remains a better option.

Fresh analysis from the independent equity release adviser shows that mortgage free retired homeowners saw their homes increase by almost £1,000 a month over the past six months despite housing market uncertainty.

Total property wealth owned by over-65s who are mortgage free is at a new record high of £1.118trn with the average homeowners seeing the value of their homes increase by £28bn.

Across Great Britain, average gains for the over 65s in property wealth are worth £5,998 each with all areas of the country benefiting in the past six months. 

Homeowners in Yorkshire and Humberside (+£8,607) have seen the biggest increases followed by those in Wales (+£7,875) and the North West (+£7,546) have also done better than average (+£5,889).

Retired, mortgage free homeowners in London (+£1,655) have the least to celebrate and have only just matched over six months the same amount over-65s in Yorkshire & Humberside have achieved in a month (+£1,435). 

Since Key started analysing the un-mortgaged property wealth of the over-65s in 2010 retired homeowners have seen growth of nearly £340bn in property wealth – equivalent to an increase of 43%.

Will Hale, CEO at Key, commented: Retired homeowners who have paid off their mortgage have made on average nearly £1,000 from their homes per month with over-65s in some parts of the country experiencing even bigger gains.  Those in Yorkshire and Humberside have seen the biggest increases while those in London have seen more modest gains.

“The numbers are fascinating but the basic fact is that no matter what happens year to year to house prices many over-65s will have considerable property wealth which can transform their standard of living in retirement and help family members. 

“Increasingly equity release customers are able to make substantial gifts to family members including their adult children or even grandchildren with money being used to clear debts, fund university fees and pay for house deposits and weddings. Customers can also use the money to ‘age-proof’ their own homes and preserve wealth for the family.

“While equity release is not right for everyone, it is clear that if your home is your largest asset in retirement, you should take some time to think through when and if you might need to access this wealth. Speaking to a specialist adviser is key to making smart choices.”

The table below shows the detailed picture across Great Britain with all areas seeing growth.

 

Region

Average change in value of home equity for homeowners aged 65+ (past six months)

Combined change in value of home equity for homeowners aged 65+ (past six months)

South East

Up £6,103

+£4.003 billion

London

Up £1,655

+£609.39 million

South West

Up £6,328

+£2.003 billion

North West

Up £7,546

+£5.063 billion

East Anglia

Up £3,133

+£1.478 billion

East Midlands

Up £7,527

+£3.129 billion

West Midlands

Up £7,376

+£2.643 billion

Yorks/Humbs

Up £8,607

+£2.483 billion

Scotland

Up £5,499

+£1.550 billion

Wales

Up £7,875

+£2.083 billion

North East

Up £4,103

+£1.128 billion

GREAT BRITAIN

Up £5,998

+£28.139 billion

The table below shows over-65s in the North West are most likely to own outright with 671,000 having paid off mortgages compared with 656,000 in the South East. However nearly a fifth of all property wealth held by retired homeowners is in the South East.

 

Region

Estimated property equity in homes owned outright by people aged 65+

Estimated percentage of total value of property equity belonging to people aged 65+

Number of households in the region owned outright by people aged 65+

South East

£214.370 billion

19.16%

656,000

London

£173.340 billion

15.49%

366,000

South West

£160.514 billion

14.35%

626,600

East Anglia

£139.026billion

12.42%

472,000

North West

£110.719 billion

9.89%

671,000

East Midlands

£82.787 billion

7.40%

431,200

West Midlands

£70.272 billion

6.28%

358,400

Yorks/Humbs

£47.289 billion

4.23%

288,600

Scotland

£42.725 billion

3.82%

282,000

Wales

£42.567 billion

3.80%

264,600

North East

£35.333 billion

3.16%

275,000

GREAT BRITAIN

£1.118 trillion

 

4,691,400

Poll: Do you think property still beats a pension?

PLACE YOUR VOTE BELOW

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  • icon

    In the 70s and 80s I had all the suited and booted spivs after me trying to sell me pensions, they promised some amazing returns, too good to be true, getting into BTL was my pension, it allowed me to give up the day job 11 yrs ago (aged 54) , I'm so glad I never got into pensions.

  • Paul Barrett

    Same scam with Endowments.
    Of course Govt doesn't really like rental property being used as an escape from paying huge fees to pension providers.
    Imagine how much fee income the greedy pension providers would garner if LL reverted to pensions to provide their pension!!!
    Pension fees have a massive effect on the pension actually available.
    Rental property was far and away the best pension provider.
    Which is why BTR is now flavour of the month..................well it will be until Mr Corbyn introduces rent controls which is publicly stated Labour Party policy!!
    Of course S24 has compromised this pension business model.
    For most S24 LL they need to deleverage as quickly as they can.
    Unless of course they are able to increase rents sufficiently to pay for S24 and also for a RTI.
    Such a situation is far from assured.
    So deleverage is for most LL a practical response to S24 taxes.
    Whether such LL can achieve such deleverage is of course another question!!

  • icon

    Pensions could work without the excgsessive fees, but with buy and hold strategy like shares, property doesn't have the wealth draining powers of pensions. In some cases the financial services make more money in fees than you do in growth via compound interest effect.....
    Wouldn't have finished work at 48 with a pension!

  • icon

    I have a private pension and mine has outperformed my properties on a percentage basis over ten years with a good financial advisor.
    I even took my cash sum out and the amount still invested has nearly reached the figure before I took this out.
    I think that it is important not 'to have all your eggs in one basket'.
    Have some in cash, some in property, some in a pension etc, that way, you are sheltered to some extent from the ups and downs of the economy.
    I also believe that where your properties are located has something to do with it.
    Properties in London and the South East will have outperformed private pensions massively.

  • icon

    I have grown a £12000 deposit on a £50000 flat to approaching £3 million equity in a £4 million portfolio over 20 years. In the early days I did this by continually remortgaging based on growing property values to get the deposit for a further property. Pensions can't possibly have the leverage effect that property offers, although with slower capital growths and reduced tax reliefs, highly leveraged portfolios are much riskier in the current anti prs environment.

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