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A significant proportion of older property owners across the UK could be underestimating the true value of their home.
New research from the Equity Release Council, also known as the ERC, has shown that many over 55s are not aware of the state of the property market in their area and they do not realise just how much values have risen on average during the last ten years.
While much of the last decade saw financial uncertainty for many, given the global economic downturn and subsequent years of recovery, at the same time, there has been considerable growth in home values in many areas, simply as a result of rising demand and constricting supply.
This means that many people that bought their home prior to the economic downturn may now be in a position where they do not realise its true value - a situation that the ERC is hoping to shed light on.
According to the organisation`s findings, 60 per cent of over 55s that own their own home in the UK have not had it valued since they purchased it, 18 years ago on average.
Furthermore, when asked to estimate the increase of value for their property since its purchase, the typical homeowner gave a figure of around 150 per cent, with the average purchase price being just over £100,000 and the believed value today being around £250,000.
However, official figures published by the Office for National Statistics show that during the last 18 years, house prices across the UK have actually risen by an average of almost 250 per cent.
This means that for many older property owners, they are dramatically underestimating the amount of equity they hold within their home, with true value being closer to the £350,000 mark.
In response to the research, chairman of the ERC Nigel Waterson stated that the typical older property owner could now be sitting on more than £90,000 in additional equity that they did not know existed, a situation that could be a significant boon for many as they head into retirement.
He added: `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.`
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