UK housing stock value hits record figure

Property owners gain £46,000 in equity over two years

UK housing stock value hits record figure

The overall valuation of UK housing stock has hit a record £7 trillion after annual house price growth reached 12.8% in May 2022, according to the Equity Release Council (ERC).

As a result, property owners have gained the equivalent of £46,000 equity per household since the summer of 2020.

In its Autumn Market Report for 2022, ERC noted that while UK households have collectively taken on over £100 billion of extra mortgage debt over the last two years, rising prices have continued to increase their equity. This has assisted as the average UK property owned through mortgage debt has fallen to 22.8% – the lowest figure since before the 2007/8 banking crisis – with the remaining 77.2% owned in equity or cash.

“Rising house prices have meant that, while mortgage debt has grown, it is secondary to vast reserves of housing equity which can help multiple generations to achieve financial security by giving them more options and choices in managing their money,” David Burrowes, chair of the Equity Release Council, said.

Read more: Could equity release help resolve current financial troubles?

The industry body for the equity release sector also found that the popularity of lifetime mortgage has increased in every UK region which, according to experts, is a significant sign that the market is in a strong position and advisers are doing a stellar job at identifying the right products for clients’ individual circumstances.

“On occasions, I have seen commentary regarding equity release being London-Centric or something that only those in the South can benefit from,” Will Hale, chief executive at later life adviser Key, noted. “Today’s figures from the Equity Release Council clear up that misconception and highlight that housing equity is being used across the country to repay mortgages, help families, and improve retirement income.

“Equity release has traditionally been more common in the South of England, backed by higher average house prices,” Les Pick, director of manufacturing and adviser propositions at equity release lender more2life, added. “However, the benefits of releasing equity are the same across the UK, so it is particularly positive to see popularity grow 40% in Wales and over a quarter in every region of the North and Midlands.

Pick said that while people are now more cautious about financial decisions, the support of a specialist financial adviser would ensure they are best placed to find the right option for their current, as well as future, circumstances.

Read more: Is equity release the right choice?

Stephen Lowe, group communications director at retirement specialist Just Group, agreed that professional advice is crucial to making sure that equity release is the most suitable solution and offers the options required.

“Members of the Equity Release Council are committed to the highest levels of consumer protection and to creating plans that continue to provide good outcomes in a changing economic environment,” Lowe stressed.

“Where equity release is the best solution for a client, it is important they are clear it is a long-term commitment with long-term implications that are best understood by everyone involved,” Simon Gray, managing director at equity release advisory firm HUB Financial Solutions, also commented. “Today’s market is vibrant with more product options and intense competition which is delivering value for money for clients.

“Potential borrowers will need the help of highly professional, knowledgeable, and regulated advisers. It is crucial to first understand a client’s situations and requirements and then seek out the most suitable solutions. Current uncertainties reinforce this need for specialist expertise to ensure plans remain suitable through economic gyrations that may lie ahead.”