£8bn wiped off property equity

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The amount of equity held by people aged over 65 slid by £7.7 billion between February and May to stand at £726.43 billion, according to insurer Prudential.

But despite the quarterly fall, the value of housing equity retired homeowners are sitting on has still increased by £12.73 billion during the 12 months until the end of May.

London was the only region in which equity levels did not fall during the period, with the average retired homeowner seeing their property value rise by £954, while those in Wales saw the smallest decline of £612.

But homeowners in the South West fared less well, with the amount of equity in their properties sliding by £6,117 between February and May, while those in the North East saw £2,964 wiped off the value of their homes.

Retired people in London still have the highest levels of equity at £163.16 billion, or more than 22% of the total for England and Wales as a whole, followed by the South East at £146.22 billion or 20% of the total.

But at the other end of the scale, retired people in the North East collectively have £20.59 billion locked up in their homes, less than 3% of the total for England and Wales.

Keith Haggart, director of lifetime mortgages at Prudential, said: "Although most retired homeowners have seen the value of equity in their homes fall in recent months, it's important that they don't lose sight of the bigger picture.

"Despite current falling property prices, in the vast majority of cases retired homeowners have built up a significant amount of equity in their homes over a number of years."

Meanwhile, research carried out by Saga, which questioned 2,209 people, found that 72% of children would be happy for their parents to unlock some of the equity in their home and spend it on their retirement. But 16% of those questioned said they would disapprove if their parents donated their inheritance to charity.