When Britain’s housing market stalled during the Global Financial Crisis, retirees found themselves in one of two broad camps. Their response largely depended on one question: did they own their home outright?

In the previous article, we looked at how Britain’s property market seized up during the Global Financial Crisis. House prices fell by around 15 to 20 per cent, buyers became scarce and sales slowed dramatically.

For people planning to sell the family home and downsize, it was an unsettling time.

So what happened next?

Making the home work harder

For retirees who owned their homes outright, the most common response wasn’t to panic or rush to sell. Many simply waited for conditions to improve.

But waiting didn’t necessarily mean doing nothing.

Some looked for ways to make better use of the home they already had.

One option was renting out a spare bedroom. Britain’s Rent-a-Room scheme became increasingly popular during and after the downturn, giving homeowners a way to earn additional income while remaining in their homes. Property economist Dr Lyndall Bryant, from Queensland University of Technology, has suggested Australia consider adopting a similar approach.

Australia, however, takes a different path. Renting out a room can affect Age Pension entitlements, creating a financial disincentive for some retirees.

Others found adult children moving back home. The Global Financial Crisis helped popularise the term “boomerang generation” as families combined households to reduce living costs. For some retirees, sharing the home helped ease financial pressure while delaying the need to sell.

Although the circumstances varied, the underlying strategy was similar: use the family home to buy time until the market improved.

Unlocking equity instead

Not every retiree owned their home outright. Many people entering retirement were still carrying mortgage debt.

For this group, another option emerged.

While much of Britain’s mortgage market struggled during the financial crisis, the equity release market proved remarkably resilient. Rather than selling immediately, some retirees accessed a portion of the wealth tied up in their homes to create greater financial flexibility.

Unlike a traditional mortgage, equity release products generally don’t require regular monthly repayments. That gave some retirees breathing room at a time when income was under pressure and housing markets were difficult to navigate.

More than one option

One lesson emerged clearly from Britain’s experience: the family home doesn’t have to be viewed as an all-or-nothing asset.

It can provide income, support multiple generations under one roof, and it can also provide access to equity that may create more flexibility when circumstances change.

For Australians approaching retirement, that’s an important reminder. Downsizing isn’t the only path available, particularly if market conditions aren’t working in your favour.

MORE INFORMATION

For readers wanting to explore the broader range of ways to unlock the wealth tied up in their home — not just by selling — our free ebook, Your Home, Your Wealth, looks at the options available. To find out more and stay updated on similar articles, email the Money At 60 team

Also check out Last Time a Property Market Froze, What Did Downsizers Do?