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Homeowners make record gains as UK house price total hits record £8.8trn

Nick Cheek
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Nick Cheek

The total value of all homes in the UK reached a high of £8.86trn at the end of 2022, analysis has found.

According to research from estate agent Savills, this was a 5.1% rise on the value of homes from the previous year and owner-occupiers made the most gains. 

Properties owned by those who have paid off their mortgage accounted for 40% of property value growth seen in the last three years, rising by £645bn. People who are still paying their mortgage made up 34% of the increase, at a value increase of £549bn. 

Rented properties are not seeing the same rise in value, which Savills attributed to increased regulation and taxation. From 2012 to 2017, privately rented homes increased by £495bn in value compared to the £443bn growth seen by mortgaged homeowners. 

However, in the five years to 2022, the value of private rented homes increased by £222bn compared to mortgaged homeowners seeing the value of their properties rise by £669bn. 

Value of mortgaged homes exceeds rentals

Lucian Cook, head of residential research at Savills said: “Not only have we continued to see people who benefitted from the homeownership boom of the latter part of the 20th century joining the ranks of the mortgage-free, but there’s also been a modest recovery in numbers of mortgaged homeowners, due to increased levels of first-time buyer activity over the period.  

“At the same time, however, we’ve seen pressure on privately rented housing stock levels, due to increased regulation and taxation, despite rising tenant demand. As a result, growth in the total value of mortgaged owner-occupied homes exceeded that seen across the private rented sector, reversing a trend seen over the previous five years.” 

Mortgage debt rising slower than home values 

Outstanding mortgage debt stood at £1.66trn at the end of 2022, up from £1.56trn the year before, Bank of England data revealed. Savills said this put net housing wealth at more than £7trn for the first time, with a record £3.34trn being held by mortgage-free homeowners. 

With the growth in property values at £425bn in 2022, the annual rise in property values was lower than 2021’s £700bn and 2020’s £500bn. 

Since 2019, the total value of UK homes has gone up by 23% or £1.46trn, while mortgage debt rose by 11% or £168bn. 

In 2022, housing equity rose £362bn and mortgage debt increased by £63bn.

Cook added: “Though mortgage borrowing equates to less than a fifth of the nation’s housing stock value, the cost and availability of that debt will be crucial to the shape of the housing market over the next four or five years. 

“Recent figures from HMRC indicate that buying activity peaks among those in their 30s, with the under-45s accounting for 59% of all purchases. While the purchasing power of older buyers is more determined by the housing equity they have accumulated, younger buyers require finance which means the mortgage markets are the engine room of the housing market.” 

Cook said recent rises in interest rates would put the budgets of first-time buyers and second-steppers under pressure this year. 

He added: “Combined with the prospect of lower levels of housebuilding, we expect that 2022 will represent a high watermark for the value of the nation’s housing stock for a few years. 

“At the same time, activity among younger buyers that has improved in recent years is likely to come under more pressure, which will present a particular challenge for policymakers.”