By Jennifer Hill

LONDON (Reuters) - Homeowners have almost two trillion pounds of wealth tied up in their properties -- providing a huge buffer against a house price downturn.

Britons have property equity worth 1.95 trillion pounds, once outstanding mortgage debt is taken into account, according to GE Money Home Lending.

Just over a quarter of British homes are owned outright -- delivering 1.37 trillion pounds of property wealth -- while people with mortgaged properties have build up 582 billion pounds-worth of equity in their homes.

The average homeowner has 127,455 pounds of mortgage-free wealth tied up in the home, giving a considerable buffer against short-term house price falls.

House price growth has slowed considerably and two of Britain's largest mortgage lenders, Halifax and Nationwide, expect prices to be flat for 2008 as a whole.

Others are expecting falls, particularly in some areas where prices have overshot the wider market.

"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 equity and a reassuring cushion against any downturn," said Gerry Bell, head of mortgage marketing at GE Money Home Lending.

"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."