Value of UK private housing breaks through the £5 trillion barrier

24th November 2014

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The value of the UK’s private housing stock has soared by 57% over the past decade to break through the £5trn barrier claims research from Halifax.

According to the lender, the total value is estimated to stand at £5.06trn, marking a £1.83trn rise on 2004’s total of £3.22trn.

The £1.83trn increase is equivalent to £79,262 per household in the owner-occupied and private rented sectors.

Notably the increase in the value of the UK housing stock has far surpassed rises in consumer prices, with the retail price index (RPI) measure of inflation up by 37% over the 10-year period,

In the past year alone, the value of the UK’s private housing stock has grown 14%, or £630bn, from £4.43 trillion, representing the fastest annual growth since 2002, which registered 21%.

Regionally, over the last 12 months the value of housing stock in London is estimated to have grown by £217bn and by £123bn in the South East; the two regions accounting for more than half of the total growth of the value of housing stock across the UK.

An increase in average property values combined with a rise in the number of private new build homes coming on to the market have been the main contributing drivers.

The value of the housing stock has grown in all 12 UK regions over the past year, and all regions have also seen a significant increase in the value of their private housing stock during the last 10 years.

Unsurprisingly, the largest increase was in London where the value of housing stock has more than doubled, at 109%, from £545bn in 2004 to £1.14trn in 2014.

The capital is closely followed by Scotland, which has seen a rise of 96%, from £170bn to £333bn. However, there have been much smaller increases elsewhere with the smallest rises in the West Midlands, at 32% and the North East, at 33%.

Housing equity rises by more than £1.4trn

In addition the study found the value of mortgage debt has risen by 47% since 2004 – from £877bn to £1.29trn but at the same time the value of the private housing stock has grown by more than four times as much as outstanding mortgage debt. As such, housing equity has increased by £1.42trn, or 61%, over the decade from £2.34trn to in 2002 to £3.76trn.

Regionally, the Halifax research found there is a wide variation in the level of housing equity, with a higher balance in the south compared to northern areas. On average, the highest amounts of equity are in London where housing equity is estimated at £820bn, which is equivalent to £313,466 per household. The capital is followed by the South East, with £726bn or £219,163 per household, and the East with £447bn or £203,462 per household.

Martin Ellis, housing economist at Halifax, said: “An increase in average property values combined with a rise in the number of private new builds has contributed to the increase in the value of housing stock across all UK regions, although the growth is stronger in London and the South East.

“Aggregate housing equity held by UK households is in a healthy state with total housing assets worth £3.76trn more than the total value of mortgage debt. Regionally, there is wide variation in housing equity, but importantly after the recent housing downturn all regions are showing increasing equity levels. More so, there are an estimated 7.2m households in England that own their home outright and are mortgage free.”

 

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