Rising houses over the past decade mean that many homeowners have seen their property wealth increase substantially over this period, especially those living in London and the South East.
According to Nationwide Building Society, house prices across the UK rose by an average of 33% between 2010 and 2020. Despite prices falling in the capital in 2019, London was still the top performer over the decade, with prices having increased by 66%, double the UK average.
East Anglia and the South West have also seen strong house price growth over this period, with prices up 43% and 38% respectively. In contrast, prices in Scotland and Northern Ireland have risen by just 8% and 2% in the past decade.
Research by retirement mortgage experts Responsible Life reveals that the last decade is the only one on record in which homeowners have injected more equity into their properties than they have withdrawn, with many opting to improve their homes rather than move.
It says that analysis of the Bank of England’s housing equity withdrawal data shows that UK homeowners have injected £271bn of equity into their homes over the past decade, in contrast to the preceding decade when they withdrew £275bn.
This change is attributed to homeowners becoming more cautious following the financial crash of 2008, although property sales have started to rebound, with HMRC’s latest UK property transactions statistics showing a 6.8% annual jump in residential transactions.
Outlook for 2020
Looking forward to this year, ongoing uncertainty surrounding Brexit means that property price growth may be relatively subdued this year, although many commentators are predicting modest increases.
According to Rightmove, average house prices will increase by 2% over 2020, with some of the biggest rises expected in northern regions. Halifax expects house price growth of between 1% and 3% over the year, whilst Nationwide anticipates that house prices will remain broadly flat over the next 12 months.
Growing property wealth of over-65s
Rising property prices in recent decades have helped boost the total property wealth owned by over-65s who have paid off mortgages to more than £1 trillion, according to independent equity release adviser Key.
Since it started analysing the mortgage-free property wealth of the over-65s in 2010, Key claims that retired homeowners have benefited from growth of 41% – a total of more than £316 billion – giving them average gains of £67,000 in almost a decade.
Although London and the South East still account for more than a third (34%) of all property wealth held by retired homeowners, their property wealth has fallen recently as the property market has slowed. In contrast, those in the West Midlands, Wales and the North West have all recorded strong gains in the past year.
According to its latest Market Monitor, homeowners released nearly £9.5m of property wealth a day last year via equity release plans, with the average customer receiving £75,631.