More than a third of the nation’s wealth is now tied up in property, according to the Office of National Statistics latest Wealth and Assets survey.
Rising property prices, particularly in the South East, have been one of the biggest drivers of increased private wealth in the UK.
Total private wealth hit £12.8 trillion between July 2015 and June 2016 – an increase of 15 per cent on the previous four-year period.
Over the same period property wealth increased by 17 per cent, up to £4.6 trillion, and now accounts for 36 per cent of all wealth in the UK.
However these figures showing a growing geographic disparity. The ONS said that in London property wealth had risen by a “striking” 38 per cent since, increasing from £0.75 trillion to £1.03 trillion.
This produced a median net property wealth in the capital of £351,000 – a 33 per cent increase on the last time this survey was conducted.
In London property is now the greatest contributor to wealth, whereas in the rest of the country pensions still outweigh property as the largest contributing factor to wealth.
Equity Release Council chairman David Burrowes says: “These latest figures reaffirm the growing potential of housing wealth.”
He adds: “As an increasing number of retirees witness a shortfall in their retirement incomes – a trend set to intensify as more people in the future shift from final salary to defined contributions pension schemes – it is vital that equity release is considered alongside a range of options to help people meet the financial challenges of planning for later life.”
The ONS data shows that across the UK as a whole, pensions make up 42 per cent of all wealth, and have been responsible for the 53 per cent increase in wealth in the past four years. However, the vast majority of this pension wealth is owned by those who are already retired, or who are members of a defined benefit pension schemes.
Hargreaves Lansdown personal finance analyst Sarah Coles says: “These figures demonstrate the huge and growing gulf between those people in Britain who hold wealth, and those who don’t. If you’re lucky enough to own a house in London and have a generous defined benefit pension scheme, then you have a huge head start when it comes to building wealth.”