Over 55s underestimate house price gain by nearly £200,000

The average over 55 home owner underestimates the value their home has gained by nearly £200,000, according to research published by the Equity Release Council.

According to the research, the average over 55 home owner puts housing value gains since they bought the property at 94% when in reality the average property price has risen by a huge £244% according to the Office for National Statistics.

The majority (60%) haven’t had their property valued since purchase around 18 years ago. The difference between reality and estimation could therefore be as high as £198,675.

This translates to £323,725 gain in equity, nearly 13 times the value of the average defined contribution pension value (£25,000) at retirement.

Asked what concerns them about making decisions about money in retirement, almost one in four (22%) are worried about not understanding their options and missing out on something that might benefit them.

Nigel Waterson, Chairman of the Equity Release Council said: “It’s no secret that the property market has been kind to many homeowners, but it’s remarkable to see how far people underestimate the potential size of their housing wealth, which puts the average pension pot in the shade.

“At a time when savings are scarce and retirees face an uncertain financial future with the end of generous final salary pensions, these findings prove just how important it is that property wealth plays a role in financial planning for later life.

“They also show a large number of people are looking for help to decide how using their savings, using equity release or downsizing can work best to meet their individual needs.

“It’s vital the Government acts on the Treasury Select Committee’s recommendation to include housing wealth within its pensions guidance service.

“It must also work with industry and regulators to improve access to advice, so people can consider all the options open to them in retirement and choose the one best suited to their circumstances.”

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