Bricks and mortar losing ‘top asset’ tag

Bricks and mortar losing ‘top asset’ tag

Housing wealth is losing its top spot as the main source of assets for households across Britain, research from Lloyds Bank Private Banking has found.

Housing now accounts for 39 per cent of total wealth compared with 45 per cent in 2004, the research has found, while the proportion accounted for by financial assets has risen from 55 per cent to 61 per cent.

More than two-thirds – 68 per cent or £2.7trn – of the rise in household wealth is accounted for by other financial assets such as savings, which have doubled in value from £2.9trn to £5.5trn.

Article continues after advert

Markus Stadlmann, chief investment officer at Lloyds Bank Private Banking, said: “Since 2004 substantial growth in the value of the housing stock and financial assets has boosted net household wealth by close to £4trn.

“A booming housing market up to 2007 coupled with the rising value of households’ financial assets held and a growing number of older households are the key drivers.”

Mr Stadlmann’s research also showed total household wealth at the end of 2014 was estimated to have reached £9.1trn, an increase of £1.5trn over the past year.

He said the increase in housing wealth has been driven by the £1.3trn rise in the value of the national private housing stock from £2.3trn in 2004 to £3.6trn in 2014.

This rise, in turn, has been driven by growth in both average house prices and the number of privately owned homes.

Meanwhile growth in mortgage debt has slowed sharply in the past five years.

Between 2004 and 2008 mortgage debt grew at an annual rate of £90bn, but this has slowed to just £12bn since 2009.

Helal Miah, investment research analyst at The Share Centre, said: “We believe that demand for housing, and therefore the house builders, will continue to do well in the short to medium term, supported by the ongoing housing shortage, attractive mortgage rates and government policy.”

Changing values £trn/£bn

£ billion2004200720132014
Value of residential properties3.2trn4trn4.4trn4.9trn
Less mortgage loans877bn1.1trn1.2trn1.2trn
Net housing equity2.3trn2.9trn3.1trn3.6trn
Total household financial assets3trn3.9trn4.7trn5.7trn
Less consumer credit loans outstanding198bn222bn219bn231bn
Net financial wealth2.8trn3.6trn4.5trn5.5trn
Net household wealth5.2trn6.5trn7.6trn9.1trn

Adviser view

Martin Gorvett, a director at Hertfordshire-based Provisio Chartered Financial Planners, said: “I think personal wealth has increased as people accept that while property is a valuable asset, it cannot provide you with an income if you are living in it so you need a diversified portfolio.”