CHRIS LOKER: SA can’t afford to shun R1.1-trillion locked up in residential wealth

As populations age and retirement savings fall short, policymakers and financial institutions in developing countries must turn their attention to an underutilised asset. In developed economies, equity release of residential property assets has become a mainstream decumulation strategy. This solution does not require subsidies or state interventions — rather unlocking what’s already there. 

Equity release — often referred to as a reverse mortgage — allows older homeowners to access the value in their homes without having to sell or move. It provides a lump sum or monthly income stream while allowing the homeowner to remain in the property. Upon death or relocation the property is sold to settle the loan. 

Globally, this financial instrument has shifted from fringe product to mainstream solution. According to the 2023 Global Equity Release Survey by EY, more than $17bn (R317bn) was unlocked by homeowners worldwide last year. That figure is expected to triple to $50bn annually by 2033. 

The US, UK and Australia now treat equity release as part of their retirement finance architecture — not just for individuals, but also for institutional investors.

State backing

In the US, reverse mortgages are securitised and backed by the Government National Mortgage Association (Ginnie Mae), while Australian and UK lenders have seen strong interest from pension and insurance funds attracted to the stable, long-term income these products generate. 

SA is overdue for the same evolution — and the urgency is growing. According to Lightstone’s 2024 research, of the 5.45-million registered residential properties in the country (excluding social housing), about a third are owned by people aged 60 or older. That is about 1.5-million homes, most of which are freehold, privately owned and not part of formal retirement schemes. 

And yet the financial reality for many of these homeowners is dire. The National Treasury estimates that only 6% of South Africans can afford to retire comfortably. Healthcare costs continue to rise well above CPI — especially for the elderly — and fixed incomes are being rapidly eroded by inflation. Yet many retirees are sitting on significant property assets they cannot tap into. 

Applying a conservative estimate — assuming just 50% of older homeowners are financially distressed, and using an average home value of R1.5m — there is more than R1.1-trillion in locked-up residential wealth. That is capital doing nothing for people who desperately need it. This is not just a financial issue; it has become a policy imperative.

The World Bank has recognised equity release as a potentially powerful tool in developing economies, especially where pension systems are underdeveloped and populations are ageing. It also warns of challenges — product complexity, regulatory risks and the vulnerability of elderly borrowers — but these are manageable with the right protections and oversight. 

SA has already laid some groundwork. Alexforbes and Nedbank launched equity release products in the mid-2000s, but withdrew after the 2008 financial crisis. Water Financial re-entered the market in 2020, but the scale remains modest. 

To truly unlock the potential, institutional capital needs to get involved, and there’s good reason for it to do so. Equity release fits squarely within the revised regulation 28 of the Pension Funds Act, which now allows retirement funds to allocate up to 45% to infrastructure investments. The definition includes physical assets and systems that support the economy, services and public wellbeing — including housing. 

Unlocking home equity for retirees achieves just that. It keeps elderly South Africans in their homes, contributing to property maintenance and neighbourhood stability. It reduces municipal defaults, delays state dependency, and injects liquidity into the consumer economy. The multiplier effect spans healthcare, home renovations, service providers and even tourism. It is economic stimulus, anchored in financial dignity. 

Yet SA retirement funds remain underweight in infrastructure, especially if benchmarked globally. According to the 2025 Global Pension Assets Study, the average allocation to alternative assets among the seven largest global pension markets (the “P7” ) is 20%. In SA it is still below 3%. This is a missed opportunity — financially and socially. 

Retirees are a unique demographic. They are typically unable to access traditional mortgage financing, have limited earning prospects, and are particularly vulnerable to economic shocks. For many, their home is their only asset of value. Equity release offers a way to access that wealth responsibly, without forcing them to sell or downsize — or worse, become dependent on family or the state. 

Used prudently, it supports independence, dignity and improved health outcomes. Ageing in place has been shown to reduce stress and improve mental wellbeing. And the ripple effects extend to the broader community: stronger social networks, less pressure on healthcare infrastructure and more stable property values. 

There are legitimate concerns about product design, moral hazard and potential exploitation. But these risks are not unique to equity release; they exist in every corner of consumer finance. With proper regulation, transparency and investor education, they can be mitigated. 

Equity release is not charity. It is not a bailout. It is a way to responsibly convert illiquid wealth into usable income — for a population that needs it now more than before.

It is also an opportunity: for retirement funds looking for long-dated, inflation-linked assets; for government seeking private capital to fund social outcomes; and for the financial sector to innovate in a way that is inclusive, commercial and impactful. 

The time for pilot programmes and good intentions is over. SA needs a mature, well-regulated equity release market that is supported by institutional capital and public policy. This is one of the few areas where financial logic and social good align. 

• Loker is executive director of Water Financial.