UK Household Wealth Has Fallen 17.5% — But Your Home May Still Be Your Strongest Asset

The scale of the wealth decline

The St. James's Place Wealth Report 2026 makes sobering reading. Average UK household wealth, when property is excluded, has fallen by 17.5% year-on-year — dropping from £126,482 to £104,329. That is a loss of over £22,000 per household on average, and the picture at the lower end of the wealth distribution will be considerably more acute.

The survey behind the figures is equally stark. When asked about their finances over the past year:

• 34% of people said their financial situation had worsened
• Only 17% said it had improved
• 21% describe themselves as financially struggling — up from 16% in the previous survey
• 69% cite rising living costs as the main cause of their financial deterioration
• 57% specifically cite food and essential costs as the primary pressure

This is not an abstract statistical story. It is the lived experience of a large proportion of UK households, including many who are at or approaching retirement age.

Why property is the asset that has held up

The key distinction in the St. James's Place data is the exclusion of property. When you include housing wealth, the picture for older homeowners looks meaningfully different. Average UK house prices remain above £280,000 despite a softer market, and the medium-term outlook from forecasters such as Capital Economics and Savills points to continued modest growth — 1.5% in 2026, 3% in 2027, and 4% in 2028.

For homeowners in their 60s and 70s who purchased their homes decades ago, accumulated property equity often represents the majority of their total net worth. While ISA balances, savings accounts, and investment portfolios have all suffered in an environment of rising costs and volatile markets, the family home has typically preserved its value far better.

This creates an imbalance that equity release is specifically designed to address: asset-rich, cash-poor households where the largest store of wealth is locked in bricks and mortar, inaccessible without selling.

What equity release makes possible

A lifetime mortgage allows homeowners aged 55 and over to release a portion of their property's value as a tax-free lump sum or a flexible drawdown facility — without selling the property, without making monthly repayments, and without losing the right to live in their home for the rest of their lives.

The average equity release drawdown in 2025 was around £75,000. For a household whose non-property savings have fallen significantly, that kind of supplement to retirement income can be genuinely transformative — covering the gap between pension income and a comfortable retirement standard, funding care costs, or simply providing a financial cushion that restores a sense of security.

Options include:

• Lump sum lifetime mortgage: A single tax-free payment, with interest rolling up until the property is eventually sold
• Drawdown lifetime mortgage: A reserve facility from which you draw smaller amounts as needed — interest only accrues on amounts actually drawn, which reduces the overall cost
• Retirement interest-only (RIO) mortgage: Monthly interest payments, with the capital repaid on eventual sale — suits those with sufficient income to service interest but who prefer not to roll it up

Addressing common concerns openly

Equity release is not right for everyone, and a good adviser will tell you honestly when it is not the best option for your circumstances. But many of the concerns that give people pause are based on outdated information or misconceptions worth addressing directly.

What about my inheritance? Equity release will reduce the equity available to pass on — this is a genuine trade-off to consider and discuss with family if appropriate. Some plans allow you to ring-fence a portion of your property's value for inheritance. Your adviser will explore the options with you.

What if I go into care or need to move? Most modern lifetime mortgage products are portable. If you need to move, you may be able to transfer the plan to a new property. Your adviser will confirm eligibility for your specific circumstances.

Could I end up owing more than my home is worth? No. All Equity Release Council-approved products include a no-negative-equity guarantee. Regardless of how long the loan runs or what happens to property prices, your estate can never owe more than the proceeds from the eventual sale of the property. This is a mandatory safeguard.

Independent FCA-regulated advice is a legal requirement for equity release. Verity Home's advisers work on a whole-of-market basis, which means we can compare products across all available lenders to find the most suitable plan for your needs and circumstances.