Value of UK housing stock passes £6 trillion mark

Mortgage Introducer

November 29, 2017

The total value of privately owned UK housing stock has surpassed £6 trillion for the first time, research from Halifax reveals today.

Since 2007, the total value of private residential property in the UK has grown by £1.94 trillion (48%) to an estimated £6.02 trillion.

In the past year alone, the value has grown by £376bn, mainly reflecting average house price growth of 5%2 in the year to August.

Private rented sector value climbs to £1.4 trillion

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 (37%).

The increase has been driven by a 45% rise in the average house price and the stock of privately owned homes expanding by 1.9 million (from 21.5 million to 23.4 million). In London, the average value per household is almost half a million (£498,000) – three and a half times higher than in Northern Ireland with the lowest value of £141,681.

Russell Galley, managing director, Halifax, said: “The value of housing stock has grown by close £2 trillion 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.”

Some 68% (£3.8 trillion) of private property wealth is concentrated in the southern regions, up from 62% in 2007. While private property wealth in the South continues to grow, the share of wealth in northern areas has fallen from 44% to 38%. Overall the value of housing in southern England has increased over two and half times faster than the north – 65% compared to 25% – over the past decade.

More than half (55%) of the £1.94 trillion rise in the last decade is accounted for by London and the South East. Since 2007, the average house price in the capital has increased by £349,629 (71%) to £579,761, while the stock of private dwellings has grown by a quarter of a million (10%).

Northern Ireland is the only region to have seen housing wealth fall (by 24%) during this period, mostly due to house prices being 34% lower than in 2007.

On average, 76% of privately owned properties across the UK are owner occupied. However, in London, less than two thirds of private housing residents live in homes that they own (62%). When all dwellings are taken into account, there is an even greater contrast between London and the UK average (48% versus 63% respectively).

UK Housing equity

There is a wide regional variation in the level of housing equity – the difference between the value of the housing stock and total outstanding mortgage debt – with a higher balance in the South compared to northern areas. The highest is in London, where housing equity is estimated at £968bn, which is equivalent to £360,193 per household. This is followed by the South East (£926 bn, £279,590 per household), and the East (£598bn, £269,756 per household).
Outside southern England, the highest equity levels are in the North West (£355 bn, £134,273 per household), West Midlands (£273bn, £137,354 per household) and Scotland (£263bn, £135,282 per household).

Generation gap

Unsurprisingly, net housing wealth peaks as homeowners reach retirement age, with 40% of wealth in households aged over 65. Three in five (61%) of homeowners in this age bracket are mortgage free. Almost a quarter (24.4%) of total housing wealth is held by households in the age group from 55 to 64. Almost half (47%) of those aged 25 to 44 have a mortgage and account for 15.4% of total housing wealth. Just 0.1% net housing wealth is held by those aged 16 to 24.

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