Property forms 60% of UK wealth
The Government has released figures illustrating the dominance of the housing market in the UK economy.
According to the Office for National Statistics’ (ONS) annual round up of UK’s financial and non-financial assets, 60% of the country’s £6.5 trillion in wealth is tied up in property.
The 5% increase in the country’s wealth since 2005 takes into account the increased value of Britain’s housing stock, which has risen by more than two and a half times during the past decade.
When compared with the annual output of the economy (or gross domestic product) figures from the ONS indicate that the UK’s measurable wealth is more than five times its gross domestic product.
This can only mean that the wealth of the country is now highly sensitive to movements in the housing market.
In 1995, arguably the start of the current boom in house prices, property assets accounted for about 42% of the market value of financial and non-financial assets of the UK, compared to 60% today.
The ONS report illustrates clearly how house prices have been forced up by speculation rather than by changes to the economy, the data shows that the cost of rebuilding every home in the UK has been rising well below the annual double-digit inflation rate for house prices.
In 2006, the cost of replacing all the UK’s capital assets stood at £2.6 trillion, of which £941 billion would have had to be spent on the housing stock.