£80bn wiped off over-50s' property

Homeowners aged 50 and over think that, collectively, their property has lost £80bn in value.

According to research carried out by LV=, those nearing pension age believe their home has lost an average of £27,250 of its value since 2007.

Those in the 60-65 age bracket think they have suffered the most, with 58% claiming the value of their home has dropped by an average of £29,000.

Nevertheless, more than 1.3m homeowners over the age of 50 plan to use the cash tied up in their property to help pay for their retirement.

Just 2% have turned cold on the concept of using their home to boost their pension income, and 11% plan to seek advice on how to access some of the cash tied up in their property by downsizing to a smaller property or using some kind of equity release mortgage product.

LV=’s research reveals that some (12%) have deliberately saved less than they would have into their pensions in the belief that their property would continue to grow in value. And 13% claim they couldn’t afford to pay into a pension because all of their disposable income went on buying their property and servicing the mortgage, as prices were so high.

Many homeowners over the age of 50 have been hit doubly hard, seeing the value of their pensions and investments slide during the recession, while at the same time being forced to reduce their savings due to pressure on their incomes.

One in five over-50s (20%) have had to cut their savings by an average of £137 a month, meaning that many more in future may need to cash in on the value of their homes to make up for pensions shortfalls.

Vanessa Owen, LV= head of equity release, said:

“In the decade leading up to the credit crunch, more and more homeowners saw their property as a potential cash cow to aid retirement. But in a matter of months millions of pre-retirees have seen both their property and pension fund values battered.

"Despite this, their confidence in the long-term value of bricks and mortar remains. House prices still have some way to go before full recovery but with increases for six consecutive months now, our HIPpies (those who belive the matra Home Is Pension) are feeling more confident that their home can still play a big part in helping to finance their retirement.”