Residential  

Property values grow three times faster than stock market

Property values grow three times faster than stock market

The total value of UK property has grown three times faster than the stock market over the past decade due to a boom in London and the south east.

According to Halifax, the total value of private residential property in the UK has grown by £1.94tn to an estimated £6.02tn since 2007 – a 48 per cent rise.

During the same period, investors tracking the FTSE100 would have seen it rise from 6,433 on 30 November 2007 to 7,460 as of 28 November 2017 – an increase of just 16 per cent.

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Property values have surged ahead on the back of long-running supply shortage, while demand has continued to rise as the government has looked to subsidise buyers with schemes such as Help to Buy.

The Autumn Budget saw chancellor of the exchequer Philip Hammond announce £15bn of additional investment aimed at boosting housebuilding to ensure 300,000 new homes are provided every year by the mid 2020s.

But senior figures from the industry and local government have said the measures do not go far enough and called for more borrowing to help meet the housebuilding target.

Halifax said the average value per household in the UK now stands at £256,912, up from £187,310 in 2007, representing an increase of close to £70,000, or 37 per cent.

This increase has been driven by a 45 per cent rise in the average house price and an expansion of the stock of privately owned homes from 21.5m to 23.4m.

But the overall figures mask a considerable divide in housing wealth between the southern and northern regions of the UK.

In 2017, 68 per cent (£3.8tn) of private property wealth was concentrated in the southern regions, up from 62 per cent in 2007, with the overall value of housing in southern England growing two-and-a-half times faster than the north – 65 per cent compared to 25 per cent – over the past decade.

More than half (55 per cent) of the £1.94tn rise in the last decade was accounted for by London and the south east.

But with average house prices in the capital climbing 71 per cent since 2007 to £579,761, increasing numbers of people have been unable to get on the property ladder.

As a result, owner occupancy rates in London are 48 per cent, compared to 63 per cent across the UK as a whole.

There is also a large generation gap when it comes to homeownership, with 16 to 24-year-olds possessing just 0.1 per cent of net property wealth, compared to a figure of 24.4 per cent for those aged between 55 and 64.

Russell Galley, managing director, Halifax, said: “The value of housing stock has grown by close £2tn in the past decade and with the equity rich regions of London and the south east largely responsible, it highlights a considerable regional imbalance in the distribution of housing wealth.

“Within the capital there is also a mix of fortunes. While more than a fifth of total property wealth is in London, lower levels of owner occupation reflect a major barrier to the property ladder with a far greater number of people renting where house prices are at their highest.”