UK household wealth increases five fold in the past 50 years
Total household wealth in the UK has increased by over five times in "real" terms over the past 50 years, new Halifax research shows. There has been an increase from £1,251 billion in 1959 to an estimated £6,316 billion in 2009 in today's prices.
Average wealth per household has risen over three times from £72,719 in 1959 to £236,998 in 2009. This is a smaller increase than that for total wealth due to the significant increase in the number of households from 16.6 million in 1959 to an estimated 26.6 million in 2009.
Housing wealth's contribution to total household wealth has increased significantly - from 22% in 1959 to 38% in 2009 - due to its more rapid rise compared with other types of wealth.
Housing wealth has increased in value nine times from £276 billion in 1959 to £2,519 billion in 2009. Increases in average house prices and the substantial growth in the number of privately owned homes - from 12.1 million in 1959 to 22.1 million in 2009 - have been the main drivers behind the growth in housing wealth. The increase in the number of privately owned homes was largely due to an increase in owner occupation from 43% in 1961 to 68% in 2009. Rising housing wealth has benefited those who own their homes and those who privately rent out properties.
The value of financial assets (such as savings, pensions and shares) increased four times from £993 billion in 1959 to £4,024 billion in 2009. The deregulation of financial markets, the rise in share ownership and changes to private pensions provision have all helped to boost the holdings of financial assets. Share prices, as measured by the FT All Share Index, have risen at a much faster rate than overall consumer prices. Whilst the retail price index has risen by over 13 times, the FT All Share Index has grown 25 fold since 1965 (when records first became available for this series).
Nitesh Patel, economist at Halifax, commented: "The past half century has seen a dramatic increase in wealth for UK householders. In addition to greater overall economic prosperity, Government policy measures such as "Right to Buy" and the privatisation of nationalised industries, coupled with the liberlisation of financial markets, have provided the impetus for increased household wealth in the forms of both housing and financial assets.
The financial position of UK households has weakened since 2007 as a result of deteriorating economic activity and reduced house and share prices. Nevertheless, much of this was recouped in 2009 as both house and equity prices recovered somewhat and notably household wealth has still risen over the past decade."