Pensioners now worth £1 trillion in property

Pensioners who have paid off their mortgages have seen their wealth increase by an average of £19,000 since May, thanks to a rising property market.

Add it all up, and it means that retired homeowners have seen their property wealth break through the £1 trillion barrier for the first time, analysis from over-55s financial specialist KeyRetirement.com shows.

Only the over-65s in London and Scotland missed out, with Londoners seeing average falls of more than £62,000 and the Scots losing nearly £16,000 on average.

And over the years, over-65 homeowners have seen strong growth, with Key's research indicating that owning a home has been worth around £9,100 a year for over-65s over the last six years.

"Property wealth is a growing asset for pensioners highlighting the success of investing in a home for the over-65s," says Dean Mirfin, technical director at Key Retirement.com.

"The long-term story as highlighted by our research is that property has performed very well with average over-65s making more than £9,000 a year during a period of record low interest rates and stock market volatility."

The South East of England has now replaced London as the wealthiest region for over-65s, accounting for a fifth of all UK pensioner property wealth. But despite the recent fall, Londoners have still done well from their homes, gaining an average of £137,000 each since 2010 - £22,800.

Research carried out late last year by the Resolution Foundation think tank showed that the recently retired in the UK are for the first time wealthier than those aged under 45.

And much of this is in the form of property, with people in their 60s now owning a quarter of all property wealth in the UK.

Many are using equity release to free up this cash, with Key's research showing that they are releasing around £76,300 on average, rising to more than £184,000 in London.

Equity release has become more and more attractive as interest rates tumble. Some equity release schemes now have rates that are just as good as standard variable mortgages.

However, it's worth remembering that with equity release interest is compounded. This means the amount that interest is charged on increases as time goes by, sending up payments. And while interest rates are likely to stay low for the next couple of years, equity release schemes last a lifetime.

Average change in value of home equity for homeowners aged 65+ between May and August
South East: increase of £42,420
London: decrease of £62,581
South West: increase of £37,902
North West: increase of £32,302
East Anglia: increase of £49,040
East Midlands: increase of £31,243
West Midlands: increase of £34,740
Yorks/Humbs: increase of £27,865
Scotland: decrease of £15,916
Wales: increase of £23,017
North East: increase of £26,889
GREAT BRITAIN: increase of £19,120