Homeowners May Still Benefit from Equity Release Schemes Despite House Price Fall

The average UK house price dropped during February for the first time in ten months but equity release customers will be encouraged that the average price of a UK property is still up on a three month basis.

According to the Nationwide, the average UK house is now valued at £161,320, which is a 1% decrease compared with January. However, more encouragingly the Land Registry reported that the average house price of £165,088 in January is 5.2% higher than in January 2009. This means homeowners considering an equity release scheme may still be able to benefit from releasing more than they could have a year ago.

A Stable Market Could Benefit Equity Release Schemes

Last month we reported on January’s modest house price rise and how it is slowing in-line with industry predictions of a stable year. This stability could further encourage homeowners to consider an equity release scheme if they are thinking of ways to support retirement income.

An equity release scheme has the potential to unlock a tax-free lump sum or regular payments depending on which equity release scheme you choose.

Due to continued house price increases in the property market over the past 12 months, many homeowners have considered equity release schemes to make the most of the value in their home. And it would be premature to consider this marginal decrease as a reversal back to declining values.

Premature to Call Decrease a Change in Pattern

Instead, factors like the heavy snow fall and the ending of the stamp duty holiday may have contributed to the 1% decrease month on month. Martin Gahbauer, Nationwide’s Chief Economist, said:

“The price of a typical UK property fell by a seasonally adjusted 1.0% month-on-month (m/m) in February, ending a strong run of nine consecutive monthly increases.  The relatively smoother three month on three month rate of inflation remained positive at +1.6%.  The average price of a typical property sold in the UK during February was £161,320.

“There is evidence from a range of indicators that the market may have lost momentum in early 2010 as the stamp duty holiday ended and house hunters were obstructed by the icy weather.”

Related posts:

1. Slight House Price Fall Shouldn’t Deter Equity Release Customers
2. Slight House Price Fall Won’t Affect Equity Release Market
3. Equity Release Customers Encouraged by New House Price Increases
4. Regular House Price Increases Could Benefit Equity Release Market