‘Wealth of the nation found in bricks and mortar’
More than half the personal wealth of the UK is tied up in bricks and mortar, according to UK insurer Prudential.
A decade ago property accounted for 40% of people’s wealth, and steeply rising house prices are credited for the growth in the intervening years.
At the same time as property has been increasing in importance, pensions, shares, life assurance policies and savings are playing a less significant role, with a volatile stock market blamed for much of the dilution of impact of these products.
Ali Crossley, director of Lifetime Mortgage at Prudential, said: “It is interesting to see how important property has become in constituting our main source of financial wealth.
“House prices have risen significantly over the last 20 years and this is one of the reasons why we have seen such a shift in wealth components.”
But the increased proportion of wealth found in property worries some economists, who reckon too many people are financially over-reliant on it.
“In recent years, many people have borrowed against the increased value of their home to fund their spending, pay off other debts or to fund home improvements,” said economist Stephen Windsor.
“Another rise in interest rates, coupled to the massive level of personal debt we have now, could precipitate a crisis involving people’s homes. And we must never forget that the property market is, at root, people’s homes.”