Older homeowners have earned £10,000 from their houses this year

Will Hale, CEO of Key, said: “With the rising cost of living, it is unsurprising that many people are looking across all their assets to see how they can best meet day-to-day living costs.”

There was a possible adverse consequence of rising property prices, David Forsdyke of broker Knight Frank Finance said. “While the gains are a good thing, for a lot of older people, the increase in property wealth could be pushing their estate into the inheritance tax bracket,” he said.

As property prices have risen, more people have been caught in the inheritance tax net.

There was a 14pc rise in tax taken by HM Revenue & Customs through ‘death duties’ last year – an increase worth £1.3 billion – in part due to frozen thresholds.

The “nil-rate band”, below which no inheritance tax is paid, has been frozen at £325,000 since 2009, even though rising property prices are pushing more and more estates into paying death duties.

‘Retirees will rely on property to fund their later years’

A separate report found that eight in 10 savers plan to use their housing wealth to fund their way through retirement, as millions expect their pensions to fall short of their needs.

Most workers plan to downsize or release cash using equity release as a way of supplementing their pensions once they leave work, research from Saltus, a wealth manager, has found.

Nearly all younger workers, 92pc, with more than £250,000 in savings said they planned to resort to using their home in this way. That is compared with just one in four of those surveyed aged 55 to 64.

On average, workers expected to fund half of their retirement using property wealth.

Michael Stimpson, of Saltus, warned that many could be in for a nasty shock if they stuck to this plan. He said: “While the temptation to make good gaps in pension pots this way is understandable, it is a fundamentally risky strategy. It depends on residential property continuing to retain its value or even rising in value, which is far from a certainty.”

Nearly half a million householders over the age of 65 in England drew an income from residential investment last year, according to analysis by estate agents Savills.

More than half of landlords have used buy-to-let properties as a long-term investment to contribute to their pension, the English Private Landlord Survey found.

Millions of 58- to 76-year-olds are not saving enough, according to major pension provider B&CE. British workers need enough to afford a retirement income that is equivalent to two thirds of their working income, the Pensions Commission warned in 2004. But two thirds of people are not putting enough aside to meet that target, analysis by B&CE found.