Aggregate net property wealth for all private households in Great Britain increased by £149 billion (4%) to £3,528 billion in current prices between 2008/10 and 2010/12.
However, aggregate net property wealth was still lower than the value seen in 2006/08 (£3,532 billion).
In 2010/12, half of all households had net property wealth of £150,000 or more.
The highest median value of net property wealth was seen amongst households in London, where half of all households had net property wealth of £239,000 or more.
Half of all households with a mortgage on their main residence owed £80,000 or more in 2010/12.
This chapter looks at estimates of household property wealth obtained from the Wealth and Assets Survey (WAS). Gross property wealth comprises the value of the main residence for a household and the value of any additional property or properties owned by any adults within the household. Estimates of a household’s property wealth do not include business assets owned by household members. The gross value of household property and the value of mortgages (liabilities) are presented at the beginning of this chapter and then combined to report on net property wealth (gross assets minus liabilities). This is followed by an analysis of net property wealth according to both household (e.g. region of residence) and individual level (e.g. age) characteristics.
Property wealth estimates are derived from respondents’ own valuations of their property. If a household’s main residence is either owned outright, with a mortgage or part owned/part rented, the person responding to the household questionnaire is asked to estimate the value of their property. For other property, each adult in the household is asked about any property owned other than the main residence and the value of their share in such property. If precise estimates of property value cannot be given, respondents are offered a choice of banded values. The precise values of these banded responses are later imputed, based on the distribution of the precise values obtained from other respondents. Respondents are also asked about any mortgages (including equity release) secured on their properties.
These data have been quality assured and compared against other sources. The quality assurance report is given in Annex 1 to this chapter.
Table 3.1 presents estimates of ownership of main residence in each two-year period covered by the separate waves of the survey. Just over two-thirds of households interviewed in each wave owned their main residence (either outright or buying it with a mortgage); a percentage which has seen little change between the three waves of the survey. However, the proportion of households who owned their home outright increased slightly across the waves (rising from 30% in 2006/08 to 31% in 2008/10 to 32% in 2010/12). Around one-third of households did not own their main residence, a consistent percentage across the three waves of the survey.
|of which owned outright||30||31||32|
|of which owned with mortgage||38||37||36|
|Not owned (rent or rent free)1||32||31||32|
Some households own property other than their main residence . There was a small increase in the percentage of households who owned some form of other property, from 10% in 2008/10 to 11% in 2010/12 (Table 3.2).
It should be noted that ‘other property’ includes property types with a wide range of values compared to the values of main residence e.g. timeshares, land plots, garages etc. The propensity to buy and sell this lower valued property may be higher than that for the higher valued property types, irrespective of the market at the time. Therefore values might be more subject to change between waves.
|Other houses/flats in UK1||6||Not available||Not available|
|Second Homes||Not available||3||3|
|Land in the UK||1||1||1|
|Land or property overseas||3||3||3|
In 2010/12, half of all households who owned their main residence valued their home at £190,000 or more (Table 3.3). Although this value has risen by £10,000 compared to 2008/10, it is the same as the median gross property wealth estimated at wave one of the survey.
Half of all households who owned other property valued this at £140,000 or more in 2010/12, an increase from £130,000 in 2008/10, and from £125,000 in 2006/08. If the values of all property owned, including both main residence and any other property are considered, half of all households owning property had a gross property wealth of £195,000 or more in 2010/12, compared to £190,000 in 2008/10, and £197,000 in 2006/08.
Figure 3.5 presents the distribution of gross values of other properties by wave and across five property value bands. It is important to reiterate that ‘other property’ includes property types with a wide range of values. The propensity to buy and sell other property – notably lower valued property - may be higher and this should be borne in mind when interpreting valuation changes over time.
The most common valuation band for households with other property was less than £125,000. In 2010/12, 47% of other properties were valued in the lowest band; lower than the corresponding percentage in 2006/08 (49%).
The percentage of other properties valued in the lowest two bands, i.e. less than £250,000, was 73% in 2006/08. The percentage was the same in 2008/10 at 73%, but decreased by 1 percentage points between 2008/10 and 2010/12. The percentage of other properties valued at ‘£250,000 or more’ varied little between waves one and two of the survey (27% in 2006/08 and 26% in 2008/10). The percentage of households valuing their other property in one of the upper three valuation bands, i.e. ‘£250,000 or more’, rose to 28% in 2010/12.
The survey asked households about mortgages (including all-in-one accounts1). The results show that:
The percentage of households who had a mortgage on their main residence was 38% in 2006/08, 37% in 2008/10 and 36% in 2010/12. This fall is consistent with table 3.1, which presented a drop in the percentage of households owning their main residence with help from a mortgage.
The percentage of households who had a mortgage on another property or properties was 4% across all three waves of the survey.
|Households with mortgage on main property||70,000||75,000||80,000|
|Households with mortgage on other property||80,000||84,000||84,000|
The survey also asked about equity release schemes. Equity release is a way of getting cash from the value of a home without having to move out. It is usually restricted to people aged 55 and above. There are two main types of equity release scheme – lifetime mortgages and home reversion plans. A lifetime mortgage is a loan secured on the home (which is not repayable until the person dies or moves into long-term care). A home reversion plan involves a firm either buying the customer's home or a part of it at a discount to the market price, or arranges for someone else to do so. In return the customer gets a cash lump sum or an income. The home, or the part of it they sell, now belongs to someone else, but the customer is allowed to carry on living in it until they die or move out. Across each of the waves, less than 2% of all households reported involvement in equity release schemes.
This section presents summary estimates for total household net property wealth in Great Britain. This is calculated as the sum of the values recorded for each household for the main residence plus any other property, minus the value of mortgage liabilities and equity release.
Table 3.7 shows the median values for total net property wealth for property owners. In 2010/12, half of all property owning households had net property wealth of £150,000 or more.
|Median household net property wealth||150,000||148,000||150,000|
|Aggregate household gross property wealth||4,492||4,359||4,538|
|Aggregate mortgage debt||960||980||1,010|
|Aggregate household net property wealth||3,532||3,379||3,528|
This section considers household property wealth by region of residence and household type. In tables 3.1 and 3.2, ownership rates were presented separately for a household’s main residence and any other property owned. Property ownership rates from now on combine these into a single property ownership rate. The rate is slightly higher than the ownership rate for a household’s main residence, highlighting the fact that persons living in a household might own other property, despite the household itself not owning the main residence.
Seven in ten households (70%) in Great Britain owned their main residence and/or other property in 2010/12 (Figure 3.9). The lowest ownership rate in each of the waves was amongst households in London, where in 2010/12, 61% of households owned their main residence and/or other property of some kind. Some reasons why London contained fewer owner occupier households include higher house prices (the average house price in London in 2011 was about £353,000, which was 2.5 times that of the North East – the region with the lowest average house price at £139,000)1 and a younger age demographic compared with other regions of Great Britain (about 23% of the population of London was within the age group 16 -29, the highest across the regions). Younger people earning relatively less than older and more experienced people are less likely to be able to afford to buy houses). The region with the highest ownership rate in each of the waves was the South East – where three-quarters (75%) of households were property owners in 2010/12.
Figure 3.10 shows median household property wealth according to the location of the main residence of the household. It shows Scotland, Wales and the nine English regions (with London shown separately; the figures for the South East exclude London).
Median household net property wealth for Great Britain as a whole stood at £150,000 in wave three. In each of the waves, the wealthiest parts of Great Britain in terms of median net household property wealth were London and the South East (Figure 3.10), with values of £239,000 and £200,000 respectively in 2010/12. The regions of Scotland and the North East had the lowest value of net property wealth at £108,000.
The household type with the lowest property ownership rate in each of the waves was ‘lone parent, dependent children’ where less than a third of households (31%) owned their main residence and/or other property of some type in 2010/12 (Figure 3.12). The household type with the highest property ownership rate in each of the waves was ‘Couple 1 over/1 under SPA2, no children’, where nearly nine in ten (89%) of such households were property owners.
Older couples with no children had the highest median household net property wealth in each of the waves (Figure 3.13). Half of all property-owning households in the household type ‘Couple 1 over/1 under SPA, no children’ had a net property wealth of £220,000 or more, and half of all property owning households in the household type ‘Couple both over SPA, no children’ had a net property wealth of £210,000 or more in 2010/12.
The household types with the lowest median household net property wealth in all waves were ‘Lone parent, dependent children’, with a value of £84,000 in 2010/12. ‘Single household, under SPA’ were the household type with the second lowest median household net property wealth (£100,000 in 2010/12).
The most common household type was ‘Couple with dependent children (please see demographic chapter). The median net household property wealth for this household type was £115,000 in 2010/12.
This section looks at some key characteristics of individuals living in households by net property wealth bands. It is important to remember that this analysis presents individual characteristics by the total property wealth of the household that the individual lives within. In certain instances it is possible that this wealth is more likely attributed to other individuals living within that household. Note that the lowest band of household property wealth includes negative property wealth.
|Gender and Marital Status||Do not own property||Less than £50,000||£50,000 but < £125,000||£125,000 but < £250,000||£250,000 but < £375,000||£375,000 but < £500,000||£500,000 or more|
Living in a non-property owning household was nearly twice as common amongst individuals aged 16-24 years as it was for those aged 55-64. Nearly two in every five 16-24 year olds (37%) lived in a household without property wealth; the highest percentage across each of the age bands (Table 3.15). Younger people are likely to be earning less than older and more experienced people, and will have had less time to afford a deposit on a house and enter the property market. Nevertheless, over three in five individuals aged 16-24 (64%) lived in a household with property wealth, and 5% of this age group lived in households with property wealth valued at £500,000 or more. This finding is likely to be attributable to the high percentage of individuals aged between 16 and 24 who still live in their parental home.
The age group 55-64 years had the lowest percentage of individuals living in non-property owning households (19% lived in a household without net property wealth). Nearly one in ten (9%) individuals aged 55-64 lived in households with net property wealth of £500,000 or more; the highest of any age group. Many individuals in this age group could still find themselves in the wealth accumulation phase, and earnings from things such as employment enable opportunities to increase property equity. In contrast, individuals aged 25-34 and 35-44 have the lowest percentage living in households with net property wealth in the highest wealth band, at 3%.
Considering the lowest net property wealth band, 1% of individuals aged 65 or older lived in households with net property wealth less than £50,000. Individuals aged between 25 and 34 years were the most likely to live in households with net property wealth of less than £50,000 (24%).
|Age||Do not own property||Less than £50,000||£50,000 but < £125,000||£125,000 but < £250,000||£250,000 but < £375,000||£375,000 but < £500,000||£500,000 or more|
Table 3.16 shows the percentage of individuals living in households with different values of net property wealth by education level.
The percentage of individuals educated at degree level or above living in households with a net property wealth of £500,000 or more was 11% – 8 percentage points higher than individuals reporting no educational qualifications. Almost two in five individuals (39%) without qualifications lived in households that did not own property. This compared with 15% of individuals educated at degree level or above and 26% of individuals who reported other qualifications.
|Education Level||Do not own property||Less than £50,000||£50,000 but < £125,000||£125,000 but < £250,000||£250,000 but < £375,000||£375,000 but < £500,000||£500,000 or more|
|Degree level or above||15||13||17||23||14||7||11|
Table 3.17 shows the percentage of individuals living in households with different values of net property wealth by economic activity.
Almost one in eight self-employed individuals (13%) lived in households with net property wealth of £500,000 or more. This is 9 percentage points higher than employees and 11 percentage points higher than unemployed individuals living in households within the highest band of net property wealth. One in ten inactive students (10%) lived in households with net property wealth of £500,000 or more, which could be due to students living at home with their parents.
The percentage of individuals living in households without property wealth was highest for those who were economically inactive due to sickness or disability, or who were unemployed (64% and 54% respectively). The percentage of individuals living in non-property owning households was lowest for those who were self-employed (16%).
|Economic Activity||Do not own property||Less than £50,000||£50,000 but < £125,000||£125,000 but < £250,000||£250,000 but < £375,000||£375,000 but < £500,000||£500,000 or more|
|Looking after family/home||47||9||16||15||6||2||5|
|Socio-economic Classification||Do not own property||Less than £50,000||£50,000 but < £125,000||£125,000 but < £250,000||£250,000 but < £375,000||£375,000 but < £500,000||£500,000 or more|
|Large employers and higher managerial||9||9||18||29||15||8||12|
|Lower managerial and professional||15||15||22||26||12||5||6|
|Small employers and own account workers||18||10||18||25||13||6||10|
|Lower supervisory and technical||27||15||24||24||7||2||1|
|Never worked/long term unemployed||55||5||12||14||7||3*||3|
This increase in house prices, which began around the mid 1990s, continued throughout much of the 2000s. There were several reasons for this prolonged period of price rises in the housing market. Up until 2008, GB experienced strong economic growth and consumer confidence. Mortgages were also readily available as banks offered competitive interest rates and high loan-to-value (95% to 100%) mortgages to their customers. As a result, people from a wide range of income levels were able to obtain a mortgage to purchase their homes. The high demand for housing, coupled with a relatively low housing supply, pushed up house prices.
This section provides brief details on the methodology used by the Land Registry, Nationwide and Halifax in producing house prices indicators based on property sales data.
The Land Registry has a record of all residential transactions in England and Wales since 1995. This dataset constitutes 16 million sales, of which 6 million are properties that have been resold during this period. The identification of these properties allow for a technique called repeated-sales regression to produce a housing price index which tracks changes in house prices over time. The ‘average prices’ reported by the Land Registry are standardised by taking a geometric mean price in April 2000 and adjusting it using the index, both backwards to 1995 and forwards to the present day. The average prices are also seasonally adjusted using classical seasonal decomposition methods. The Land Registry collects information on all transactions regardless of method of purchase, and therefore is not only restricted to mortgage purchases. However, the dataset only includes transactions at full market value, and excludes sales from repossessions and auctions as they do not reflect full market price. Also, the data from the Land Registry are only available for England and Wales. For more details, see http://www.landregistry.gov.uk/.
Nationwide is the second largest mortgage lender (by stock) in the UK, and using data for mortgages that are at approvals stage, it calculates a housing price index to gives current indications of the housing market. The house price data consist of mix-adjusted prices, which gives an indication of how the price of a typical property changes over time. The prices are also seasonally adjusted. See http://www.nationwide.co.uk/hpi/default.asp for further information.
Halifax uses similar methods as those used by Nationwide in standardising house prices, and as such, both of these mortgage lenders produce similar housing price indices over time. Differences between the two indices are primarily due to the differences in their samples. Like Nationwide, Halifax takes into account various attributes associated with each property transacted. These attributes refer to both quantitative (e.g., age, number of rooms) or qualitative (e.g. location, type) characteristics of the property, and are translated into factors in a multivariate regression model to produce a standardised price. As a result, this technique allows the price of a ‘typical’ house to be tracked over time on a like-for-like basis. Both seasonally adjusted, and non-seasonally-adjusted house prices data for UK regions and different dwelling types are available on the Halifax website. For more details see http://www.lloydsbankinggroup.com/media1/research/halifax_hpi.asp
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