UK household wealth rises to over £10tn

Total household wealth grows by £892bn in 2016 

Research from Lloyds Bank Private Banking shows that the total household wealth in the UK reached an estimated £10.5tn in 2016. This is an increase of £892bn (or nine per cent) from £9.6tn in 2015.  The past decade has seen wealth held by households increase by £3.9tn (59 per cent) from £6.6tn in 2006.

The increase of £3.9tn in household wealth is equivalent to £143,059 per household since 2006. This means the value of household wealth has grown faster (59 per cent) than both the Retail Price Index (up 33 per cent) and gross household disposable income (up 37 per cent) in the past decade.

Average house prices rose by 4.9 per cent during the year and an additional 183,000 homes were added to the stock of private properties (both owner occupied and those in the private rental sector). This resulted in housing wealth contributing an estimated £431bn to the overall increase in wealth – accounting for 48 per cent of the total rise. 

Having fallen in importance relative to financial wealth over much of the past 10 years, the contribution of housing wealth in the household portfolio mix has edged up in the past year from 41 per cent to 42 per cent in 2016. The proportion accounted for by financial assets is 58 per cent.

The total value of financial assets (such as bank and building society deposits, government bonds, shares in companies, life assurance and pensions) held by households increased by a similar amount –  £461bn or eight per cent – in 2016.

In previous years, the value of financial wealth has been driven by growth in the value of equities held by households in life assurance and pension fund reserves, which in 2016 grew by just 10 per cent.

Sarah Deaves, private banking director at Lloyds Bank, said: “For many people, their overall wealth is locked up in assets that they hold for the longer term like their homes, their pensions, ISAs and investments.

“With rising house and equity prices, net worth has increased substantially in the past decade, growing by £143,000 per household on average. Increasing levels of wealth are clearly positive for households, but with recent changes, like pensions freedoms, it also highlights the increasing importance of proper financial planning, especially as people approach and move into retirement.”