LONDON: UK household wealth rose by £892bn in 2016 to hit £10.5 trillion following an increase in the value of financial and housing assets, according to research from Lloyds Bank. The research found that wealth held by households increased by £3.9 trillion, or £143,059 per household, in the past decade from £6.6 trillion in 2006. The bank’s measure factors in the value of residential buildings and financial assets including bank and building society deposits, government bonds, shares in companies, life assurance and pensions.
The contribution of housing wealth in the household portfolio mix increased in the past year from 41 per cent to 42 per cent in 2016. Meanwhile, the proportion accounted for by financial assets stood at 58 per cent during the year. Nearly 60 per cent or £2.2 trillion of the £3.9 trillion rise in household wealth since 2006 is accounted for by financial assets. The research pointed out that over three-quarters of households’ total financial assets are made up of life assurance and pension funds. A further 21 per cent is in the form of deposits held with financial institutions. Since 2006, the market value of pensions has grown by £1.5 trillion to £4 trillion.
Meanwhile, the increase in housing wealth was led by the £1.7 trillion rise in the value of the national private housing stock from £2.6 trillion in 2006 to £4.4 trillion in 2016. Sarah Deaves, private banking director at Lloyds Bank, said: “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. “With rising house and equity prices, net worth has increased substantially in the past decade, growing by £143,000 per household on average. Increasing levels of wealth are clearly positive for households, 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.”