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Growth in financial assets sees household wealth rise to over £10trn

The collective household wealth of people in the UK reached an estimated £10.5trn last year, increasing by £892bn from the £9.6trn recorded in 2015, according to Lloyds Bank.

10 AUG 2017 | CHRIS SEEKINGS
household wealth on the rise / istock
Household wealth on the rise ©iStock

More than half on this was due to a rise in the value of financial assets such as bank deposits, pensions, and shares, which increased in value by £461bn.

House prices contributed to around £431bn of the total wealth, which was found to have risen in value by £3.9trn over the last decade from £6.6trn in 2006.

"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,” Lloyds Bank director, Sarah Deaves, said.

“With rising house and equity prices, net worth has increased substantially in the past decade, growing by £143,000 per household on average.”

Financial assets, 77% of which is held in pension funds and life assurance, account for approximately 57% of the rise in wealth since 2006.

Some 21% of these assets are in the form of deposits with organisations like banks and building societies.

Between 2006 and 2015, it was found that the market value of pensions grew by £1.5trn to £4trn, while equities and investments increased in value from £31.3bn to £687bn.

While it was found that the value of private housing stock in the UK increased from £2.6trn to £4.4trn last year.

This was driven by growth in average house prices, which increased by 51%, as well as the number of privately owned homes, which grew by 9% from 21.5 million to 23.4 million.

It was also found, that while housing stock grew in value, growth in mortgage debt fell from an average annual rate of £106bn in 2006 and 2007, to just £16bn today.

“Increasing levels of wealth are clearly positive, 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,” Deaves added.


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