Household wealth soars past £7 trillion

Total household wealth for the end of 2012 is now estimated at £7.05tn while there has been an increase of £2.71tn over the past decade, equivalent to a rise of £86,000 per household

Despite the housing market downturn since 2007, housing wealth has grown by £1tn (54%) in the past decade as the value of property has risen (+£1,604 billion) by more than the increase in mortgage debt (+£591 billion).

Substantial growth in house prices in the period up to summer 2007 and an increase in the number of privately owned homes has seen the value of the UK's private housing stock increase to £4.2tn in 2012 from £2.6tn in 2002.

In the past decade, the value of mortgage debt has almost doubled from £675 billion to £1.3tn - an increase of 87%. Average annual growth in mortgage debt has, however, slowed to just 1% since 2008, compared to 12% per year between 2002 and 2007.

Since 2007 household wealth has grown by £478 billion (7%); driven mostly by a £462 billion (13%) increase in financial assets. Not surprisingly, given the decline in the residential property market, housing wealth has risen by a modest 1% over the period.

Average wealth, including property, stands at £255,502 per household. According to the latest ONS Wealth and Assets Survey 2008/10, there is a substantial divide between the wealthiest and the less wealthy. The wealthiest 10% of households have an estimated average wealth per household of £1.82 million, which is 22 times more than the average wealth per household for the bottom 50% of £82,000.

The research also found that total financial assets increased in value from £2.45tn in 2002 to £4.14tn a decade later, contributing £1.7tn (63%) to the overall increase in total household wealth during the decade. Financial assets include bank and building society deposits, government bonds, shares in listed companies, life assurance and pensions.

In spite of the subdued economic climate, households have also benefited from stock market growth during the same period, with investments in equities rising by over £35 billion (or 21%).

Nitesh Patel, economist at Lloyds TSB Private Banking, commented: "Household wealth has gone past £7tn for the first time; growing by over an estimated £2.7tn in the past decade. Most of this increase came during the "boom" years prior to 2007 when the economy grew rapidly, with rising employment and incomes.

"While wealth has soared in the past decade, there is a large divide in where it has accumulated. The wealthiest 10% of households hold 22 times more wealth, on average, than those in the bottom half.

“This is a substantial gap, although many of the wealthiest are older individuals who have had a much longer time to accumulate their wealth holdings, as well as to reduce their debts."