Value of UK property tops £5 trillion

The value of the UK's housing stock has surpassed £5 trillion, according to new research.

A report by Halifax shows that the private housing market's total worth has risen from £3.22 trillion in 2004 to £5.06 trillion - a rise of 57 per cent, or £1.83 trillion, in the past decade.

That increase is equivalent to £79,262 per household in the owner-occupied and private rented sectors, a rise that has outstriped consumer prices (the retail index jumped 37 per cent in the past decade). Indeed, in the past year alone, the property market's value has risen 14 per cent (£630bn) from £4.43 trillion, the fastest annual growth since 2002, when values increased 21 per cent.

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 ten years. The largest increase was in London where the value of housing stock has more than doubled (109 per cent) from £545bn in 2004 to £1.14 trillion in 2014. The capital is closely followed by Scotland, which has seen a rise of 96 per cent (from £170bn to £333bn). However, there have been much smaller increases elsewhere with the smallest rises in the East Midlands (32 per cent) and the North East (33 per cent) (see Table 1).

The value of mortgage debt has risen by 47 per cent since 2004 (from £877bn to £1.29 trillion), 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 £1.42 trillion (61 per cent) over the decade from £2.34 trillion in 2002 to £3.76 trillion.

"There are an estimated 7.2 million households in England that own their home outright and are mortgage free," says Martin Ellis, housing economist at Halifax.

Regionally, 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 (£726bn or £219,163 per household) and the East (£447bn or £203,462 per household).

Outside southern England, the highest average equity levels are in Scotland (£249bn, £126,930 per household), the North West (£278bn or £106,011 per household), and West Midlands (£248bn or £125,532 per household). The lowest housing equity is in the North East (£84bn or £91,641 per household) and Northern Ireland (£14bn or £21,519 per household).

The rise in equity has seen a growing number of homeowners become more confident in the past year, putting their houses up for sale so they can upsize themselves. With the 2015 election nearing, though, and interest rates expected to climb, sellers are becoming more cautious once again this Christmas.

Photo: EEPaul

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