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Retired UK home owners seeing value of property grow
Retired home owners in the UK have seen their property wealth grow by nearly £17.5 billion in the past three months as house prices continue to climb, new research shows. Pensioners who own their homes outright have gained an average of £3,725 each from their houses in the past three months taking their property wealth to a new record high, according to the index from over 55s financial specialist Key Retirement. In the five years since Key started monitoring the housing wealth of the over 65s, in January 2010, total pensioner property wealth has increased by 14% or £111 billion which equates to £23,700 on average for every home owner. The Pensioner Property Index shows over 65 home owners now own property wealth of £891.249 billion outright with pensioners across almost all of the UK benefiting. Key believes the strong growth in property prices will drive expansion of the equity release market further which enables homeowners to release wealth from their homes. Customers releasing property wealth are taking around £68,500 on average, its figures show. Retired home owners in London were the biggest winners gaining an average of around £14,238 each in the past three months, while home owners in the South East of England are more than £8,290 better off and pensioners in East Anglia are £8,524 better off. Key’s figures show a fifth of all pensioner property equity is owned by over 65s in London with total wealth of £178.894 billion. Nearly two thirds of pensioner property wealth is concentrated in London, the South East, the South West and East Anglia. ‘The strength of the housing market is reflected in the growth in the amounts being released through equity release plans which are now an average £68,500, an amount which dwarfs the average pension pot in the UK,’ said Dean Mirfin, technical director at Key Retirement. ‘The success of property investment for millions of over 65s home owners highlights how homes are major assets which should be considered as part of anyone’s retirement planning,’ he explained. ‘Property prices rise and fall but over 65 home owners control more than £891 billion in assets which can make a major contribution to enhancing retirement lifestyles. Pensioners however need specialist advice before accessing their property wealth,’ he added. Continue reading
Property prices gap between Sydney and other cities in Australia widens
The gap between property price growth rates in the eight Australian capital cities has widened, according to the latest figures to be published. The data from the Australian Bureau of Statistics shows that said over the year to June 2015, the price index rose by 9.8% with a 4.7% increase occurring during the June 2015 quarter. Sydney led the way with price growth of 18.9% far more than any other capital city. Next Melbourne with growth of 7.8% but all other cities were some way behind, opening u a considerable gap. Brisbane saw price growth of 2.9%, followed closely by Canberra with growth of 2.8%, then Adelaide with 2.7% and Hobart with 1.5%. But in the other cities prices have fallen year on year. Perth saw a fall of 1.2% and Darwin a decline of 1.8%. Annual house price growth was 10.5% with prices in the semidetached home sector increasing by 7.5% over the same period and according to the Housing Industry Association (HIA), the voice of Australia’s residential building industry, the variation in price growth across the capital cities is remarkable. ‘On the one hand, price growth is very robust in both Sydney and Melbourne, while prices have actually eased back a little in cities like Perth and Darwin,’ said HIA Senior Economist, Shane Garrett. ‘The wide divergence of dwelling price growth across the capitals is indicative of the mixed economic conditions across Australia. It highlights the challenges in prescribing ‘one size fits all’ policy responses to the housing market,’ he explained. ‘The strength of dwelling price growth in Sydney is receiving much attention. However, the upturn in Sydney prices follows a decade which saw the city lag far behind the other seven capitals in terms of price growth,’ he pointed out. ‘Price pressures ultimately represent the inadequate response of supply to much stronger demand conditions. We need to see more flexibility in the planning process and in the release of new residential land in order to take the heat out of prices,’ he added. Continue reading
Over half of UK home borrowers will struggle if interest rates rise, says new poll
Some 52% of borrowers in the UK believe they will struggle or fall behind with mortgage repayments when interest rates rise, according to new research published by the Building Societies Association. The survey has revealed that one tenth would experience real financial problems. A further 14% said they would be able keep up with repayments, but it would be a constant struggle, while almost a quarter, 23%, said that they would experience difficulty from time to time. When questioned about the impact on their lifestyle, 18% of borrowers said they will have to cut back on essentials such as food or clothing in order to make their monthly repayments. A further 15% said they will have to work more hours in order to keep on top of their mortgage commitments. ‘Concern from borrowers is natural when it comes to interest rate rises. There are at least 1.85 million home owners that have never experienced a rate rise, we have a record low Bank Base Rate for so long, it is unsurprising that some people are concerned that a rise in rates will affect their lifestyles and ability to make mortgage repayments,’ said Paul Broadhead, head of mortgage policy at the BSA. ‘Clearly some of the actions borrowers say they would take may not be within their control, for example working additional hours. Our advice to those concerned about interest rate rises is to start thinking about how they will manage the increased costs. This could include creating a household budget, to taking a look at mortgage calculators and rescheduling unsecured loans such as credit cards. Free money advice is available for those that are concerned,’ he explained. ‘The good news is that the results of our survey show nearly a quarter of borrowers will not have to make any changes to their lifestyle when interest rates rise. With the economy more stable than it has been for years, this is a positive result,’ he pointed out. ‘That said, with inflation near zero and the Monetary Policy Committee voting by a majority of eight to one to maintain the Bank Rate at 0.5%, it is looking unlikely that things will change before well into 2016,’ he added. Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, said that after years of low rates, borrowers’ minds are beginning to focus on the prospect of higher interest rates, and what this will mean for their finances. ‘Nevertheless, many mortgage payers are still in for a big financial shock when rates do start to climb and we remain concerned that many will fall into problem debt as a result. We must not forget that renters, too, are likely to be affected as extra mortgage costs are passed on by landlords,’ she explained. ‘Households now have a window of opportunity to re-assess their budgets, look again at their borrowing and think about how they will cope with higher interest rates. It is crucial… Continue reading
