Household Wealth Increases By £165,000

HAMISH_MCTAVISH

In 50 years, adjusted for inflation.

In 1959, typical household wealth – including equity in property, savings, pensions and shares – was the equivalent of £72,700 in today’s money. By last year, the figure had risen to £237,000.

The biggest rise was seen in the 1980s when household wealth more than doubled, but household wealth fell by 15 per cent between 2007 and 2008 and remained 8 per cent below its 2007 high despite an improvement last year.


Nitesh Patel, economist at Halifax, said: “The past half century has seen a dramatic increase in wealth for British householders. In addition to greater overall economic prosperity, Government policy measures such as Right to Buy and the privatization of nationalized industries, coupled with the liberalization of financial markets, have provided the impetus for increased household wealth in the forms of both housing and financial assets.”

She added: “The financial position of 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.”

The increases in house prices and a large rise in the number of privately owned homes have been some of the main factors pushing up households’ wealth.

brit1234

HAMISH_MCTAVISH wrote: »

In 50 years, adjusted for inflation.

Where savings have now dramticallyfallen and debt levels are at a all time high.

As for property wealth, well thats not tangible. Its just illusionary figures which is being wipped out as prices fall to more normal levels.

Again Hsmish does not put a link, ashe has a habit of excluding key text.

Generali

Link Good luck Portsmouth today. You're bust and you know you are.

DaddyBear

So as house prices rise, 'wealth' rises? Talk about stating the obvious.
A more interesting statistic would have been a comparison with 1950 that EXCLUDED housing equity. That would be nowhere near as high and is a far more relevant indicator of wealth.

Exocet

As I may have hinted at previously I don't think housing wealth is a tangleable asset. Things like gold, shares, PO savings and premium bonds can be cashed in putting real money in your pocket. But living in the place where the majority of your 'wealth' is stored is a problem if you need to access the cash. This is a bit of a conundrum, or con for short.

HAMISH_MCTAVISH

DaddyBear wrote: »

That would be nowhere near as high and is a far more relevant indicator of wealth.

Both housing and non housing wealth have increased.

In addition to greater overall economic prosperity, Government policy measures such as Right to Buy and the privatization of nationalized industries, coupled with the liberalization of financial markets, have provided the impetus for increased household wealth in the forms of both housing and financial assets.”

Cleaver

brit1234 wrote: »

As for property wealth, well thats not tangible. Its just illusionary figures which is being wipped out as prices fall to more normal levels.

Brit, we fully understand that you think (and want) property prices to fall. We get it. We really do.

But why the stupid comments like this? Of course property 'wealth' is tanglible. If you own a house that someone is willing to buy for £150k, and only have a mortgage of £60k on that property, then your 'wealth' from selling that house is £90k. That's not 'illusionary' or 'not tangible'. It's completely real.

In fact, this is the case for any asset you care to name. A share, a block of gold, a bottle of wine, a bond, a completed Panini sticker album from 1984. All of these things can go up and down in value, and you won't realise any value until you sell them. But this doesn't mean that this value isn't 'tangible'.

Cleaver

Exocet wrote: »

As I may have hinted at previously I don't think housing wealth is a tangleable asset. Things like gold, shares, PO savings and premium bonds can be cashed in putting real money in your pocket. But living in the place where the majority of your 'wealth' is stored is a problem if you need to access the cash..

True. Which is why it's only a small percentage of people (i.e., those on this forum, kinda including myself) go nuts when Nationwide tell us that house prices have risen or fallen by a couple of percent. Most people just live in their house and don't really give a stuff. Houses tend to go up in value over the long term, which is all most people really care about.

Exocet

Cleaver wrote: »

Houses tend to go up in value over the long term, which is all most people really care about.

Which makes one feel richer, although this is arguably an illusion. Perhaps I am a glass half empty person, therefore the thing that concentrates my mind is more the mortgage - as it reduces I do feel wealthier. But the Nationwide price index, or local Rightmove stats, or some perceived value of my house, don't do anything for me. That's because I have to live somewhere, therefore I regard it as fiscally neutral, if that is a genuine term.

I appreciate that my family could become cash wealthier by moving into a smaller property, but the same wealth enhancement could be achieved by any downsizing of aspiration - such as a smaller car, less TV channels, own brand crisps, etc.

The additional, and important downside of rapid house price increases beyond wages, is the effect it has on one's own children. Unless prices correct it will be much harder for them to buy a house. The wealth in my own house does not help them, unless by happy coincidence I were to die as they start looking at their first purchase.

So my case is simply that house price increases are not good news, although they are constantly reported as such.

Doctor_Gloom

Cleaver wrote: »

But why the stupid comments like this? Of course property 'wealth' is tanglible. If you own a house that someone is willing to buy for £150k, and only have a mortgage of £60k on that property, then your 'wealth' from selling that house is £90k. That's not 'illusionary' or 'not tangible'. It's completely real.

It's only tangible if you sell your house and then go live in a tent. Otherwise you're likely to buy another property which will similarly have risen in value. You're likely to be no better off, actually worse off in all liklelihood given increased stamp duty,etc. So I'd class it as an illusory gain whereas an increase in one's share portfolio, pension fund, etc. is a tangible gain.

LisbonLaura

HAMISH_MCTAVISH wrote: »

Both housing and non housing wealth have increased.

Is that measured in GBP?