Equity release could be hit as house prices drop

Equity release could decrease as rising stock in the property market forces house prices to drop.

This drop in property prices has been fuelled by the return of confidence to the housing market as more and more people are putting their properties up for sale.

The impending rise in the capital gains tax has further added to this phenomenon with most property owners trying to sell off their houses before the tax hike is implemented, suggested Lucian Cook, director at Savills.

He said: "If you do have a disconnection between the amount of stock on agents' books and the number of buyers around in the market, then the natural consequence of that is that prices soften."

Housing stock increased by nine per cent in May this year, according to FindaProperty.com. The latest property figures are 31 per cent higher than the trough in August 2009.

Ashall Glover Financial Services are equity release specialists