THERE is a lot of debate around how much of the £3.6 trillion of private pension wealth will hit the housing market thanks to the recent pension reforms.

Savills Research has estimated, using ONS data, that 29 per cent of people aged 55-64 have a current defined contribution pension and their median pension pot is worth £25,000.

In total, this age group holds defined contribution pensions worth £120 billion.

A much smaller proportion of pension holders will be in a position to afford to purchase a property – either outright or with mortgage.

And holders of larger pension pots are more likely to have existing investments in residential property and therefore may be less inclined to further concentrate their investments in the sector

However, all this considered, having analysed a range of factors including distribution of pension wealth and propensity to invest, Savills Research estimates that 10 per cent of defined contribution pension wealth held by those aged 55-64 could make its way into the housing market.

As a result we are anticipating a spike in interest in property locally from the over-55s.

For those who are dissatisfied with their pension growth, bricks and mortar offers a tangible asset over which investors have control.

And with rental yields exceeding four per cent in many locations, it is possible to cover costs while ultimately relying on long term capital growth.

In central Cheltenham, this change is likely to have the most impact on the demand for apartments.

The lower price point and cheaper stamp duty are an obvious attraction and build styles range from conversions in Regency, Georgian and Victorian properties through to purpose built blocks from the 1960s onwards.

Lateral living has great appeal and this demand for rental properties is such that new investors should see a return sooner rather than later.

Whereas you would expect to find young professional couples dominating the rental market, we are seeing an increasing number of affluent downsizers and even families renting apartments as a means of remaining in town when their children are born.

Compared with pension funds, property is perceived to be a straight forward and low risk investment.

The over 55s we see buying for investment are usually downsizing from a larger house and will buy something smaller for themselves along with an investment property.

For both their primary and investment properties, we are seeing appetite for city centre locations.

There is already a huge appetite for apartments in Cheltenham and its surrounds.

They are rarely on the market for very long and with the added demand that the pension reforms will bring to the lower end of the market it’s only a matter of time before we see the impact further up the chain.

It’s like a domino effect as those selling on their apartments then look to buy a larger property.

Chris Jarrett, Savills head of residential sales in Cheltenham