Almost £2 trillion of wealth in our homes

House price inflation has contributed to UK homeowners’ wealth, generating a staggering £1.96trillion of property equity, according to research from GE Money Home Lending. This equity - which provides a buffer against potential short term falls in prices for many - equates to approximately £127,455 for each UK property.

The company’s analysis of industry data, including research on home ownership from GfK NOP, reveals that some 26% of people own their homes outright and as a result of phenomenal house price growth, have accumulated a staggering £1,377 trillion of property wealth.

Furthermore, homeowners with mortgages have also benefited from growth in recent years. According to the analysis some 36% of Britons have a residential mortgage, with the average borrower owning almost a third of their home. This equates to approximately £582 billion worth of equity.

On a regional basis the picture is extremely varied with the South East accounting for the lion’s share of UK property wealth (19.2%). This is followed by London (14.1%), making them the two “wealthiest” regions when it comes to property equity. The North East has only 2.97% of the property wealth whilst Wales has 4.5% - the two lowest percentages in the country.

Gerry Bell, Head of Mortgage Marketing, GE Money Home Lending, said: “Whatever happens to the property market in the short term, we have had a prolonged period of rising prices which have - importantly - helped many homeowners to build equity and a reassuring cushion against any downturn. However, whilst consumers should take some reassurance from the equity that they currently hold in their homes, they also need to ensure that they are not complacent and continue tomake prudent financial decisions – particularly in an environment of economicslowdown which could potentially see house prices falling.

“It is true that many homeowners have benefited from significant growth in house prices recent years but clearly the picture is complex. What this research highlights are interesting regional variations. Whilst the majority of property equity is found in London and South East, almost a third of homeowners actually own their own homes outright in areas with significantly less equity - such as Wales and the North West. So while these consumers are not as equity-rich they are less impacted by rates rises and house price uncertainty.”