Household wealth grows by £143,000 in just a decade
Total household wealth in the UK reached an estimated £10.5trn in 2016, an increase of £892bn or 9% from the £9.6trn figure recorded in 2015.
In the past decade, household wealth has increased by £3.9trn (59%) from the £6.6trn noted in 2006.
The research from Lloyds Bank Private Banking reveals that the £3.9trn growth in household wealth is the equivalent to £143,059 per household in the past decade.
As such, it said household wealth has grown faster than both the Retail Price Index (59% vs 33%) and gross household disposable income at 37%.
Housing wealth has contributed significantly to the figures. Lloyds said the increase in housing wealth has been driven by the £1.7trn rise in the value of the national private housing stock from £2.6trn in 2006 to £4.4trn in 2016.
This rise, in turn, has been driven by growth in both average house prices – 51% higher than in 2006 – and the number of privately owned homes which grew by 9% from 21.5 million in 2006 to 23.4 million in 2016.
Financial assets such as bank and building society deposits, government bonds, shares in companies, life assurance and pensions held by households have also increased by a similar amount – £461bn or 8% in 2016.
Over half (57% or £2.2trn) 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 to £6.1trn. Life assurance and pension funds make up over three-quarters (77%) of households’ total financial assets, and a further 21% is in the form of deposits held with financial institutions.
Sarah Deaves, private banking director at Lloyds Bank, said: “For many people, their overall wealth is locked up in assets that they hold for the longer term like their homes, their pensions, ISAs and investments. With rising house and equity prices, net worth has increased substantially in the past decade, growing by £143,000 per household on average.
“Increasing levels of wealth are clearly positive for households, but with recent changes, like pensions freedoms, it also highlights the increasing importance of proper financial planning, especially as people approach and move into retirement.”