Average house prices rose by almost 5 per cent during the year, and 183,000 new homes were added to the stock of owner occupied and privately rented houses.
This helped housing wealth to add about £431bn to the overall increase in wealth, accounting for 48 per cent of the total rise.
Lloyds’ research found that, having fallen in importance relative to financial wealth over much of the past 10 years, the contribution of housing wealth in the household portfolio mix has edged up in the past year from 41% to 42% in 2016.
Over the last decade, household wealth has increased by 59 per cent or £3.9trn. This works out at about £143,000 per household.
This means the value of household wealth has grown faster than both the Retail Price Index (up 33 per cent) and gross household disposable income (up 37 per cent) in the past 10 years.
The increase has been driven by the £1.7trn rise in the value of the national private housing stock since 2006. This rise, in turn, has been supported by growth in both average house prices and the number of privately owned homes.
While the value of the housing stock has increased substantially, growth in mortgage debt has slowed sharply since 2008.
Mortgage debt in 2006 and 2007 grew at an average annual rate of £106bn (11 per cent). But since then the annual rate has declined to just £16bn (1 per cent).
Meanwhile, the total value of financial assets (such as bank and building society deposits, government bonds, shares in companies, life assurance and pensions) held by households increased by a similar amount - £461bn or 8 per cent - in 2016.
In previous years, the value of financial wealth has been driven by growth in the value of equities held by households in life assurance and pension fund reserves, which in 2016 grew by just 10 per cent.
Over half of the £3.9trn rise in household wealth since 2006 is accounted for by financial assets, which have grown by one-and-a half times in value over that period.
Life assurance and pension funds make up over three-quarters of households’ total financial assets, and a further 21 per cent is in the form of deposits held with financial institutions.
During this period, the market value of pensions has grown by 65 per cent to £4trn, while the value of equities and investment funds has grown by 5 per cent to £687bn.