It sometimes occurs to me that the national media is not quite as interested in a ‘good news story’ as they are with ‘bad news’.
This is why, for instance, on television the good news comes as an ‘And finally’ while the rest of the programme is taken up with varying degrees of doom and gloom.
You might rightly point out that perhaps there is little to be positive about these days, but this doesn’t detract from the relish with which the media reports on the negative.
We need only look at the front pages of a few notable daily national newspapers towards the end of last year and their focus on the ‘impending UK house price crash’, to see what gets the journalistic juices flowing.
There is a real sense that scaremongering and ramping up the ‘crash story’ tramples over the facts and, by increasing consumer insecurity, these headlines actually lead to the crash which would otherwise have been avoided.
With UK house prices in general, the validity of the price of an average UK house needs to be questioned anyway. Can we really talk confidently about UK house prices falling when the reality is that it’s very regionalised? Deliberating on the UK as a whole could be
completely irrelevant to an adviser in their particular town. It is the changes and fluctuations that occur at the local level which will be of most interest to advisers and their clients.
The equity release market is really no different and while looking at the UK market as a whole will give us an understanding of the sector, it is important that we are aware of the regional variations.
One report which highlights these fluctuations comes from Key Retirement Solutions (KRS). Its most recent Equity Release Market Report shows the ongoing differences between the UK’s regions.
Unsurprising results?
Perhaps unsurprisingly it is the population of the South East that continues to take out the largest number of equity release plans – both lifetime mortgage and home reversion – with 4,788 having been taking out at the time of the report’s publication in October 2007, compared with 4,594 for the same period in 2006.
It also has the highest amount of equity released through the plans at £260 million, compared to £228 million in 2006.
In terms of the number of plans, coming behind the South East were the North West, with 3,156 plans, and the South West, with 2,756, while the second highest amount released was that of the South West with £150 million, followed by London with £149 million.
As you can see, the take-up of equity release plans is a predominantly Southern-based activity at present.
These figures would also be borne out by Bridgewater’s own spread of home reversion plan business which is also focused on the East and South East where our average case value is £79k against an overall UK average case value of £75k.
Our other areas of good business volume include, as per the Key report, the North West (average case value of £62k) and also Yorkshire with its average case value of £58k.
Startling figures
The KRS report for all equity release plans shows that the average amounts released were highest in London, at £85,000, while the lowest amounts could be found in the North at just under £36,000. It is across the Irish Sea where the most startling increases have been seen.
Figures for Northern Ireland now show that £13 million has been released compared to just £3 million in 2006 with three times the number of plans being taken out over the same period.
KRS put this down to a number of factors including the large increases in house prices, the improved availability of equity release plans and the expansion in the number of equity release advisers.
Across the border in Scotland, the KRS report also paints a healthy picture, with total lending and the number of plans taken out doubling over the previous year’s figures.
Having said that, the average amount released in Scotland fell by 10 per cent over the year from £43,000 in 2006 to £39,000 in 2007.
Other providers’ experience of the Scottish sector has been somewhat different, with only a small number of home reversion cases being received.
This could be put down to a number of reasons, not least the differences in the legal and benefits situation, where the elderly across the border seem to receive a far better standard of care and service than those in the other home union countries.
Across other regions, particularly in England, KRS is seeing something of a plateau in the overall number of equity release plans, although again other providers’ experience is different in that they have seen a continuing steady increase in volume since regulation.
The report reveals that the number of plans dropped in both the North West and the West Midlands compared to its 2006 figures. However lending was up due to the increase in the average value released.
Getting a better picture
Overall we can say that the demand for equity release products is increasing slowly but, as the figures reveal, it is important to break the country down into its component parts to get a better picture.
An increase in the number of equity release advisers across the whole of the UK will go some way to spreading the educational message and giving consumers the information they need about their equity release options.
Advisers in areas where there are currently low volumes of equity release may do well to consider this market now before the competition get in on the act. After all, this consumer market likes nothing better than a local adviser.
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