Record rise in household wealth
Household wealth passed £9 trillion in 2014, following largest annual increase since records began.
Total household wealth in the UK increased by £1.5 trillion in 2014, the biggest annual jump since records began, according to new research from Lloyds Bank Private Banking.
As a result, household wealth has now passed £9 trillion, with the average household now worth £326,414.
Growing fast
Last year's big rise was driven by growth in property prices and the value of financial assets.
With average house prices rising by 9% during the year, housing wealth contributed an estimated £452 billion to the overall increase, about one third of the total rise.
The total value of financial assets (bank/building society deposits, government bonds, shares, life assurance and pensions) held by households has increased by almost £1 trillion. This included a £757 billion rise in the equity held by households in life assurance and pension fund reserves and a 20% rise in UK gilt prices during 2014, particularly in the 25-year and 35-year stocks.
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Housing wealth eclipsed
It's interesting that despite huge house price growth over the last decade, housing wealth has fallen in importance relative to financial wealth. Housing wealth now accounts for 39% of total wealth, down from 45% in 2004. Meanwhile the value of financial assets has jumped from 55% of our wealth to 61%.
Wealth outpacing inflation
Since 2004 household wealth has jumped £3.9 trillion in total, an increase of 75%. As a result wealth has grown at a faster rate than inflation – the Retail Prices Index has only increased 31% over that period. It has also significantly outpaced the 42% rise in gross household disposable income.
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