by Mark Johnston
Recent research has shown that current average house price is approximately 105 times higher than it was when the queen was coronated in 1952, meaning that climbing on to the property ladder in that year required just £1,520.
In the silver jubilee in 1977, the average price was only £9,737 and today’s average house price is 16 times higher at approximately £160,000.
Adam Challis, head of research at Hamptons International, said “Britons are well known for their love affair with bricks and mortar and the jubilee property price analysis goes someway to prove just what a reliable investment property has been over the long term”.
While the financial crisis has shared off £6 billion off assets since 2007, collective household wealth in theUKwas estimated to be £6.6 trillion at the end of 2011.
A recent report has shown that total household wealth increased by 55% in the past decade to £242,000 and this is equivalent to £86,500 per household in a 10 year period.
According to recent research by Lloyds TSB private banking the value of wealth has grown at a faster rate then both the rise in consumer prices and disposable incomes.
Other research from property website primelocation claims that there is £5.6 trillion worth of property inBritain; however this figure has been calculated on estate agents asking prices which can be notoriously optimistic.
Data has shown property as a percentage of wealth has gone up from 36% in 2001 to 40% in 2011. Suren Thiru, Lloyds TSB private banking economist, stated that “rising house wealth has benefited those who own their own homes and those who rent out properties in the private sector”.
Despite the downturn in the economy since 2007, household wealth has declined by just £6 billion over the past 4 years which it seems is mainly down to much lower house prices.
The paper value of homes has barely been dented by the financial crisis, but despite low interest rates, much tougher lending conditions which resulted in the mortgage crunch has meant that home owners are no longer able to use their properties as the ‘cash machines’ they once were.
During the house price boom many home owners and buyers used easy credit to extend mortgages, re-mortgage or even take out second mortgages to unlock cash in their homes. This was a major driver ofBritain’s booming consumer economy.
However the theoretical value of many home owners’ properties is now an untappable resource with the best mortgage rates only offered to those with large equity and a good credit rating.
Therefore in the midst of house values growing in the past decade, mortgage debts have also risen significantly at the same time.
The total value of mortgage debt more than doubled from £591 billion to £1.25 trillion.
All in all whilst the financial position of UK households has weakened a little since 2007, overall their financial position is still a lot stronger than a decade ago.
Story link - House Prices Help Drive Household Wealth
Related stories to : House Prices Help Drive Household Wealth