A third of consumers are planning to depend on property for their retirement, despite the current state of the housing market, according to Friends Provident.

The life and pensions firm has urged people to look beyond property when it comes to retirement-planning. It has calculated that if house prices fall to the level of the last property slump in 1992, the average homeowner may be left in negative equity to the tune of £89,850 (this is based on figures from the Council of Mortgage Lenders, showing the current average mortgage is £129,000 at 80% loan-to-value).

Jeremy Ward, head of pensions marketing at Friends Provident said: “If house prices continue to fall, people could find themselves in serious financial difficulty with negative equity on their property and no personal pension. This is a dangerous situation to be in if people don’t have any savings or a pension to purchase an annuity for their ‘winter’ years.

“Our research shows a potential crisis for some people in the future. People have depended on the property market in the past to fund their retirement, but with the uncertainty over the past few months and the current credit crisis they should not put all their eggs in one basket.”