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Household wealth in UK nearing £8 trillion: Lloyds

Ashish Misra, head of investment policy at Lloyds Bank Private Banking, said: “In the past year, household wealth grew by £717bn, the largest yearly rise in the decade.

“Increasing activity in the housing market and continued growth in equity prices has boosted household wealth to £7.8 trillion over the decade, equivalent to a rise of £96,000 per household.”

Since 2003, household wealth has grown by 63 per cent, a faster rate than both gross household disposable incomes and consumer price inflation.

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However although housing wealth is up by £1.2 trillion over 10 years, it has fallen in importance relative to financial wealth - accounting for 42 per cent of total wealth compared with 45 per cent in 2004.

Andrew Dawson, financial planner for Cornwall-based Coast to Coast Financial Planning Services, said: “This shows that the gap between rich and poor is widening daily. It is the medium figure of household wealth, which gives figures above and below, that are important.

“If you have four homeless people in a soup kitchen and Bill Gates walks in, you are not going to take the mean average, it is a meaningless figure. These figures tell us nothing.”

In contrast, the figures also found financial assets, which includes bank deposits, shares and pensions, have risen in importance from 55 per cent in 2004, £2.7 trillion, to 58 per cent, £4.5 trillion, in 2013.

The increase in the value of properties, to £1.7 trillion over the decade, is almost 3.5 times the rise in mortgage debt, which stands at £503 billion. This means despite mortgage debts, housing wealth has grown by 58 per cent, to £1.2 trillion.

The study also said there had been a 65 per cent rise in the value of mortgage debt over the period - from £775bn to £1.3 trillion.

However average yearly growth in mortgage debt has slowed to just 1 per cent since 2009 compared to 12 per cent a year between 2003 and 2007.

Mr Misra said that low mortgage rates, as well as lower levels of house purchases made with loans have both contributed to easing the overall mortgage debt burden in the past five years.

Key Figures:

■ UK household wealth close to £8 trillion

■ Total household wealth up by over £3 trillion since 2003 or £96,000 per household

■ Household wealth grows faster than disposable income and inflation

■ Financial asset value rises as housing wealth drops