Analysis of the Bank of England’s (BoE) housing equity withdrawal data from 1970 to 2019 shows Brits have injected £271bn of equity into their homes over the past decade — almost equivalent to the £275bn withdrawn in the decade before.
From 1970, when the records began, to the end of the 2000s, homeowners withdrew more equity than they injected in every decade with the trend only reversing in the 2010s.
The BoE measures Housing Equity Withdrawal (HEW) by taking the difference between net lending secured on homes and households’ gross investment in housing.
Analysis shows the financial crash of 2008 was a turning point for equity withdrawal as, from June 2008 onward, it marked the first time there were 12 successive months with more equity injected into property than withdrawn.
This suggests Brits have consistently invested more equity into their properties than they have withdrawn in every single quarter since June 2008. Responsible Lending said this could be attributed to homeowners becoming more conservative with their spending following the financial crash.
The financial crash resulted in a fall in property transactions to nearly half of pre-crisis levels. Although sales have started to bounce back, with on average 269,735 transactions a quarter in 2019, they have still not reached the levels seen in 2007, when transactions averaged 403,453 a quarter.
Steve Wilkie (pictured), managing director of Responsible Life, said: “The aftershocks of 2008’s financial earthquake continue to be felt in the property market.
“The financial uncertainty sparked by the crisis has created a generation of homeowners who are improvers rather than movers, using excess cash to invest in their property and pay down debt.
“This has helped to contribute to the inertia being felt in the property market, where transaction levels have failed to bounce back since 2008.”