You are here: Home - News -

Value of UK housing stock soars to record £6.8 trillion

by:
  • 18/01/2017
  • 0
Value of UK housing stock soars to record £6.8 trillion
The value of properties in the UK reached a new record of £6.8 trn last year, according to research from Savills, with privately held housing wealth moving past £5trn for the first time.

Perhaps unsurprisingly, London and the South East saw the biggest growth in values. While these two regions boast just a quarter of all UK homes, over the last five years they have accounted for more than half of the total value of growth.

However, the study found that price gains were more evenly distributed across the country than at any point since the credit crunch. Properties in Bristol gained £6.6bn in value over the year, passing the £50bn mark, while Cambridge, York and Solihull have also seen big gains.

Nonetheless, there are still areas where weaknesses in the local economy are causing values to fall, such as Hartlepool (housing value down by £76m in the last five years) and Burnley (down by £122m in the same period).

According to Savills, landlords and those who own a property without a mortgage have been the biggest winners.

Private landlords account for £1.4tn of housing value, and have seen the value of their properties rocket by 64% over the last five years. Meanwhile, properties owned without a mortgage have jumped 42% in value, compared to 19% for those with a mortgage.

There may be trouble ahead

However, the sharp growth seen in recent years is likely to come to an end.

Lucian Cook, head of residential research at Savills, said that the big jumps in value over the last three years have been driven by low interest rates and strong consumer sentiment.

But this is unlikely to be repeated, according to Cook, who said: “Economic uncertainty in the short term and more rigorous stress testing of mortgage lending in the longer term, will hold back house price growth and limit the ability of future generations to accumulate housing wealth.”

A stark generational gap

The difference between the generations was also described as “stark” by Savills. The over-65s now hold £1.42trn of property equity, the equivalent of 43% of the equity held by owner occupiers.

In contrast, the under 35s hold £70bn – just 5% of that equity total.

Cook pointed out that housing equity has always been weighted towards older generations, who have paid down their mortgages. He added: “But since the credit crunch we’ve seen the generation gap widen significantly as younger buyers increasingly struggle to get onto the housing ladder and older home owners live longer and accrue higher levels of equity through house price growth.

“High house price to income ratios and mortgage regulation suggest this pattern will become even more entrenched in the next decade.”

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
headshot of Steve Carruthers at Newcastle BS
Newcastle refreshes mortgage range and appoints 3 BDMs

Newcastle Intermediaries, the broker-facing brand of Newcastle Building Society, has expanded its product offering with ten new mortgage deals.

Close