Signs show that more and more HIPpies are having to consider down sizing or releasing equity from property, as inadequate pensions and returns on savings are there only chance of a decent retirement in modern financial conditions.
A report out from self-styled retirement specialist LV says that approximately 1.2 million future retirees may cash in their property to help fund retirement.
LV calls these people HIPpies (‘Home Is Pension’), an appropriate description when you consider this is the very generation that flirted with flower power in the late 1960s and early 1970s.
Of course, most of these hippies are not planning to sell their home, but rather will look to top up their mortgage. We may well see a rise in equity release schemes. But LV may well have underestimated the resistance that some have to equity release, and one assumes others will sell their homes and downsize instead.
Around 6.8 million homes in the UK are bigger than their occupiers require, meaning they have more than one spare bedroom. It was suggested that the owners of these homes lived in properties that were bigger than they required simply because they saw their home as an investment. So, one assumes that if you are approaching retirement, if your pension is inadequate and your home is bigger than you need, the most logical course of action is to downsize.
The second supporting indicator of this market change comes in a report from the Bank of England which suggested lending criteria for mortgages are set to get even tougher. The credit conditions survey from the bank said that fears over impending public sector job losses are going to make banks even more cautious with their lending. And so the trend we have seen recently of falling demand while supply picks up seems likely to become even more exaggerated over the next few years.
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