Long term growth in UK house prices and homeowners’ lasting attachment to their homes mean over-45s in the South-East are turning attention towards property wealth to help manage their finances and boost retirement incomes, according to the latest Aviva Real Retirement Report.
It shows half (50%) of over-45 homeowners in the South-East see property wealth as a key part of their retirement income planning, compared to 46% across the UK as a whole.
But with many facing pressure from existing mortgage debt, a desire to help younger generations onto the housing ladder, and concerns over making their money last in later life, the report raises the question: is there enough house to go around?
The findings show:
- More than a quarter (27%) of mortgaged over-45s in the South-East are worried about paying off their home loans, including a significant 15% who are very worried.
- The South-East’s mortgaged over-45 homeowners have outstanding loans of £75,338 on average: 10% more than the national figure of £68,189.
- This is likely to influence the fact that mortgaged over-45s in this region are the second most likely behind London to be uncertain about when they will ever become mortgage free: over a quarter (27%) feel this way, compared to just 17% across the UK. Another 7% in the South-East think they will never pay off their mortgage.
Equity and emotions invested in property
Despite this pressure, Aviva’s research finds 71% of over-45 homeowners in the South-East agree that their home is worth more than their pensions, savings and investments combined (compared with 69% across the UK).
Owner-occupied homes among South East’s over-45s are worth an average of £344,105: almost a third (30%) more than the UK average of £264,402 and the second highest of any region behind London.
Beyond the pure financial considerations, many have also developed a strong attachment to their home with the average over-45 homeowner in South-East owning just three properties during their home-owning ‘career’ and living in their current home for 21 years.
Borrowing in retirement
Asked about their plans for retirement, three in four (75%) over-45s in the South-East want to remain living in their home for as long as they are physically able to. This compares with 80% across the UK as a whole, and suggests those in the South-East are more open to moving in later life: 7% say they want to move to a more rural location.
The most common reasons among those in the South-East for wanting to stay put are because they are happy or content in their current homes (28%), value their independence (27%) or feel their neighbourhood is safe or convenient (12%).
Asked if they envisage a need to keep borrowing or borrow again in retirement, almost one in ten (9%) over-45 homeowners in the South-East expect they will need to do so to achieve the goal of remaining in their current home.
11% expect to need to borrow in retirement to meet one-off expenses, while one in ten (10%) expect they will need access to retirement lending to meet daily living costs.
Overall, almost one in six (15%) over-45 homeowners in the South-East expect to need to borrow in retirement for at least one of these reasons.
Over half (53%) of South-East’s over-45 homeowners feel they could benefit from using their home as an extra source of retirement income (compared to 52% in the UK).
At the same time, they have other uses in mind for their housing wealth: 62% feel it will be needed to pay for care in later life (vs. 56% - UK) while the same proportion feel their quality of life would benefit from using housing wealth to pay for home adaptations (vs. 56% - UK).
Furthermore, two in three (66%) see property wealth as a key part of their inheritance planning. However, half (50%) of those in the South-East would prefer to give money while they are still alive – a ‘living inheritance’ – to help a family member buy their first home rather than leave a traditional inheritance, while just 36% say the opposite.
Intergenerational wealth transfer – can savings take the strain?
Over a quarter (27%) of over-45 homeowners in the South-East have or plan to give money to help a child buy their own first home: four percentage points lower than the national average (31%). The average contribution made – £24,860 – is just 1% lower than the national average (£25,090).
Most of those who give financial help to their family use their savings and investments to do so, either to pay for a deposit (77%) or to buy a property outright (9%).
However, over-45s in the South-East are often restrained from helping due to their own finances with more than two in five (41%) wanting to help a family member get on the ladder but being unable to afford to. A significant 44% believe their younger relatives will never be able to afford to buy a property without help from their family.
Almost three in five (56%) over-45s in the South-East do not feel comfortable giving this help without knowing how much money they themselves need to live on in later life, the same proportion as the national average. This chimes with the fact that, when it comes to their own finances, Aviva’s data shows making their money last long enough is people’s biggest concern in retirement.
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