Homeowners aim to raise £186bn from downsizing

Homeowners aim to raise the equivalent of £186bn to help fund retirement income by selling their homes, new research from housing investment and shared equity mortgage provider Castle Trust shows. Castle Trust’s research reveals that around 3.25m households – 13% of working adults - plan to downsize their home to help fund all or part of their retirement. On average they hope to buy a home 36% cheaper – equivalent to £57,400 cheaper, based on an average UK home worth around £160,000. And that is just the average, with 11% of downsizers aiming to buy a house at least 50% cheaper to help fund their retirement, while a further 4% plan to sell their home and not buy another property. Castle Trust, a new financial services company that has launched with the aim of providing a safer way to invest in property and a safer way to buy a home, wants homeowners to be realistic about using their home as a source of income for retirement and to consider to risks of relying on a single property rather than a diversified index. It is offering new investment products called HouSAs which enable savers to invest efficiently in the national housing market via their SIPP or ISA and which provide returns in excess of the Halifax House Price Index.  Sean Oldfield, chief executive officer at Castle Trust, said: “We know that many people regard property as a good way to save for retirement – in fact the ONS Wealth and Assets Survey has shown that 60% of people under retirement age think that it is the best way to do so. “However, your home is not an investment unless you are willing to permanently downsize, which only 13% of the population plan to do.  This means only about one in eight people plan to access the value in their home to fund retirement and the remainder will be generally heavily underweight housing as an investment. This is extraordinary when you consider that residential property is the UK’s largest asset class - at over £4 trillion it is greater than equities, gilts and bonds combined. It has also historically had the highest risk-adjusted returns of any of the major asset classes.  “For those 13% who are considering part of their home as an investment, they should be aware that the value of an individual property can differ greatly from the performance of the national index.”

Article courtesy of Property Investor Today

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