New figures released this week from Halifax show that the value of the UK’s privately-owned homes over the past decade has grown by £376 billion to reach £6.015 trillion.
Halifax estimates that the average property wealth per household is £256,912 which is an increase from £187,310 in 2007 just as the financial crisis was about to hit.
The definition of property wealth in this survey is equity – which is the difference between the value of the house and the outstanding debt. It is certainly positive news that property wealth has expanded considerably across the country; however the worrying part of this survey is the age breakdown.
First time buyers have certainly got numerous hurdles to overcome to purchase their property as many rely on the bank of Mum and Dad to put down a deposit on their first property. Although recently we have seen stamp duty axed for first time buyers.
It is however estimated that this is unlikely to make a significant difference as the independent Office of Budget Responsibility have said this will only create 3,500 more first time owners.
This makes the figures released by Halifax certainly more worrying, as figures show that 40% of property wealth today is accounted for by households aged over 65, with three-fifths of that number being mortgage free – therefore enjoying a bigger equity. Nearly another quarter of total housing wealth is held by households in the 55 to 64 age group.
Therefore those aged 55 and above own over 63% of the country’s equity in housing while those aged 16 to 34 own precisely 3.3% of property wealth.
Even if you combine the total equity owned by those aged between 16 and 44 the total is 15.5%.
Of course as younger home owners today pay off more of their mortgages, their equity will grow as they get older. A number of young people also inherit a large proportion of property wealth from their parents and grandparents. However, this does not apply to every young homeowner and perhaps those in wealthier families will benefit most.
Here is the total household net property wealth distribution by age group, according to the Halifax: