Equity release still possible as prices fall

Falling house prices should not impede those aiming to get equity release products.

Ship (Safe Home Income Plans) argues the process of equity release is safe, either imminently or at some point in the future, pointing out equity release is a long-term product, detached from short-term price volatility.

"The current situation in the property market does not mean the door is closing on equity release - far from it," said Andrea Rozario, director general of SHIP.

"Falling property values do however make the very high standards that SHIP members must adhere to all the more important to consumers, especially the guaranteed security of tenure and the no negative equity protection that guarantees customers can never owe more than the value of their property."

Recent research from Halifax and Nationwide finds house prices fell in consecutive years for the first time in over a decade during April.

However, Ship maintains the long term trend of property prices is almost always upwards, and even if there is a slide backwards for a period of time, history shows the process is usually reversed in the end.

"Declining levels of pension investment - by individuals and employers - and the extent to which Britons have in preference invested heavily in property for many years now, mean that equity release will become increasingly important, even if property values do come down from their recent highs for a while," continued Ms Rozario.

"There is an argument for those planning to access the value in their property to move quickly if their need is imminent. Those looking to the longer term should take comfort in the longer term trend in property values which is always up."

Chris O'Toole