There is nearly £2 trillion worth of wealth tied up in homes in Britain, research has shown.

GE Money Home Lending said once any outstanding mortgage debt has been taken into account, homeowners have property equity worth £1.959 trillion.

The group said £1.377 trillion of the total is down to the 26% of people who own their home outright.

A further 36% have mortgages but have still accumulated £582bn of equity.

The group said the average homeowner can afford short-term house price falls, calculating that they have £127,455 of mortgage-free wealth tied up in their property.

Gerry Bell, head of mortgage marketing at GE Money Home Lending, said: "Whatever happens to the property market in the short-term, we have had a prolonged period of rising prices which have, importantly, helped many homeowners to build up equity and a reassuring cushion against any downturn.

"However, whilst consumers should take some reassurance from the equity that they currently hold in their homes, they also need to ensure that they are not complacent and continue to make prudent financial decisions - particularly in an environment of economic slowdown which could potentially see house prices falling."

The group said a third of housing equity is held by homeowners in London and the South East - where house prices are highest - leading to an uneven distribution across the country.

People in the South East are collectively sitting on £377bn of equity, the equivalent of 19% of the total for Great Britain, with those in London holding £276bn worth or 14% of the total.

The North East accounts for just 3% of the nation's housing wealth - with housing equity worth only £58bn - while those in Wales have just £88bn or 4.5%.

But despite the lower value of housing equity, people in Wales and the North West are 50% more likely to own their home outright than those in London, with 30% of people in these regions not having a mortgage, compared with just 20% of homeowners in the capital.

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