In the past three months, pensioners who own their properties outright have lost a total of £3.64bn in equity due to a drop in property values, the equivalent of £787 each, according to the latest statistics compiled by equity release specialist Key Retirement Solutions.

However, the average figures disguise a widening gulf opening up between pensioners in the South West of England, Scotland and Wales, who have experienced major falls in equity, and the North-West, East , West Midlands and Yorkshire and Humberside, where retired homeowners’ properties continue to gain in value.

The average over-65 homeowner in Scotland lost £6,399 in the past three months while in Wales they were £2,062 worse off and £2,063 down in the South West.

Over-65 homeowners in London suffered a £1,210 drop but have still seen average gains of around £20,000 in the past year.

The biggest winners were pensioners in the West Midlands who gained £980 in the three months while over-65s in the East of England were £636 ahead. In Yorkshire & Humberside property equity increased £421 and it rose £495 in the North West.

Key Retirement’s figures show 34% of pensioner property equity is owned by over-65s in London and the South East – in London over-65s own property without any mortgages worth £132.27 billion while in the South East pensioners own £123.927 billion of property without mortgages.

Dean Mirfin, group director at Key Retirement Solutions, said:

“The housing market remains volatile with areas such as Scotland, the South West and Wales seeing major swings. Even London has seen a drop after racing ahead throughout most of 2012.

“However there are still bright spots with four regions seeing gains and the essential fact remains that pensioners are literally sitting on a major asset.

“Whatever the trend in the housing market, even for those regions experiencing falls, over-65s own considerable property wealth which represents a massive investment success as they no longer have mortgages on homes they may have bought more than 25 years ago.

“The equity release market is seeing strong growth in the number of plans sold and the money released as more pensioners opt for drawdown products. They enable customers to benefit from lower borrowing costs today, allowing for increased flexibility to access further funds over time as and when required.”