The chancellor’s declaration of a stamp duty holiday formed a key component of the life-support measures for the economy during the coronavirus crisis.
The idea was to stimulate demand by lowering costs, and thereby keep the engines turning. This has worked – demand has indeed surged. But as a result, house prices have climbed, in many cases offsetting the saving of stamp duty.
According to research from Key Equity Release, older homeowners (those over 65) have seen their property wealth increase by around £9,214 each. This figure is an average: the whopping £1.224 trillion owned by those who’ve paid off the mortgage grew by £46.135 billion last year, which works out at just under ten grand per homeowner.
Will Hale, CEO of Key, commented: “The property market has performed strongly despite the economic uncertainty caused by the pandemic with the Stamp Duty holiday on homes worth under £500,000 providing a material boost to demand.”
Gains upon gains
If we go back to 2010, when Key first began to collect this data, we find a compound growth of around 57%, or £444 billion. This amounts to around £88,735 per household. While the past year has been a good one for those who already own property (though obviously not for older people in general), it’s a continuation of a longstanding trend.
Differences across the country
The North West is slight below the average, with prices rising by around £7,614, which amounts to just over £4.13 billion across the entire region. This compares not very favourably to London (up £21,027) and the South West (up £15,618) – but we have to consider the value of property in those areas to begin with. Wales was the only part of the UK where property values have actually declined, by around £1,970 per homeowner.
In the North West, around 7.8% of total value in equity belongs to people over 65, which adds up to around 542,504 houses across the region. Again, the South has a far larger amount of equity, and a greater portion of that is owned by those over 65. In the South East, it’s 20%; in the South West, it’s 15%.
Hale was keen to paint a rosy picture of the future for these homeowners. “…short or medium-term volatility in the housing market does not change the basic fact that millions of over-65s retain considerable property wealth which can transform their standard of living in retirement and enable them to address a wide range of needs and wants.
“Equity release is one way that older customers can tap into their property wealth. Demand for later life lending products has remained strong throughout the coronavirus crisis and with an increasing number of options available it is vital that customers seek specialist advice in order to find the product that best fits their individual circumstances.”
