In today’s random world, it’s harder than ever to predict events.

In the past decade alone, we’ve had Donald Trump, the shock Brexit result and the ongoing pandemic, plus the guy from ‘Have I Got News For You’ is still at the wheel here. Well, at the time of writing he is, anyway.

So predictions are hard work right now. If anyone saw all of the above coming, I hope they got a fiver on it down at the bookies.

One thing we can say, however, is that UK property appears to be a safe bet. Over the past 10 to 20 years, house-price inflation has far outstripped any traditional savings vehicle. Homes essentially have become the pensions of many people around the country. And these alternative pension pots are growing.

Homes have become the pensions of many people

According to the Halifax, annual house-price inflation is at the highest for 18 years. House prices, on average, now exceed £270,000 and, from December 2020 to December 2021, just over £24,500 was added to the average price. A staggering climb.

However, as the pandemic kicked off, many people were predicting a crash — understandably. We were all locked away in our homes and the uncertainty of the situation could well have caused the market to freefall.

But, as we’ve seen above, the opposite has happened. Of course, things like the government’s Help to Buy scheme have helped, but overall the property market has proved itself to be incredibly robust.

In fact, even following the 2008 crash, the housing market demonstrated immense ‘bounce-back-ability.’ Property prices rebounded to original levels in a relatively short time and then began an impressive climb that continues today.

I will be watching with interest to see if this supposed tailing-off of growth really does occur

So I would take with a pinch of salt the most recent analysis suggesting that house prices could tail off this year. The Halifax has suggested price growth will “slow considerably” in 2022 as the government looks to hike interest rates to tackle inflation. But we’ve heard that before.

Peace of mind

The significance for the mortgage market and, more specifically, equity release is that a healthy housing market will help solidify and support growth. Customers will more readily look to unlock their equity if they think their property will continue to increase in price. What’s more, people who have seen their savings stretched by the pandemic feel peace of mind in knowing their property is a good investment.

With a growing property market, industries such as equity release have some wiggle room to get creative. More products than ever before have been launched in recent times, many with unique perks and features that have enabled equity release to further diversify its customer base. And much of this is down to the confidence derived from house-price inflation.

Even following the 2008 crash, the housing market demonstrated immense ‘bounce-back-ability

Finally, an obvious but critically important point: house-price growth means people will have more equity to release. With a bigger chunk to play with, customers can expand their plans and use the lifetime mortgage to deliver the things they really need in their retirement.

Essentially, house-price inflation could lead to a solution to the retirement finance crisis we are stumbling towards. Most people have very limited savings in their pension pots, and a large number have nothing at all. Add to this the fact that retirement is lasting longer than ever, and there’s an obvious problem: people will be running out of cash in later life.

But property could come to the rescue and things like equity release and remortgaging in later life could be the alternative millions of pensioners need to find. That is not to say caution is not required, and an understanding of potentially decreasing house prices must also be considered.

House-price inflation has far outstripped any traditional savings vehicle

Of course, soaring house prices have a downside too. Making that first step onto the property ladder is tougher than ever for younger people. But more and more customers within the equity release space are bridging the gap for their younger family members and releasing their own equity to provide a deposit or money towards one. So, in essence, the historical house-price inflation they have benefited from has, for some, actually helped their younger generations too.

Ultimately, a buoyant housing market is good for everyone in the mortgage market, and I will be watching with interest to see if this supposed tailing-off of growth really does occur.

But, even if it does, I can’t foresee a dip lasting for long.

Andrea Rozario is chief corporate officer at Bower