Value of UK residential property soars by £1.8 trillion in past decade

by Ray Clancy on February 13, 2012

Value of UK's private housing rose from 2001 to 2011 by £1.8 trillion, says research

The value of the UK’s private housing stock rose by £1.8 trillion, some 84%, in the decade to 2011, according to new research from the Halifax.

The value of the housing stock at the end of 2011 is estimated at £3.9 trillion, up from £2.1 trillion in 2001. The increase of £1.8 trillion over the decade is equivalent to £68,500 per household in the owner occupied and private rented sectors in the UK. The value of the UK private residential housing stock has grown at more than twice the rate of increase in overall consumer prices, with the retail price index up by 38% over the past ten years the research also reveals.

The picture changes when looking at the value of housing stock since 2007, however. Over the past five years the value of the UK’s housing stock has declined by 5%, or £187 billion. This reflects the reduction in house prices since autumn 2007. But the Halifax says that this decline more than compensated for by the significant increases in the half decade prior to 2007.

Whilst the value of housing stock has soared during the past decade, so has the total value of outstanding mortgage balances, which have more than doubled, up 111%. The £1.8 trillion increase in the value of housing assets, however, outstripped the £655 billion rise in mortgage debt between 2001 and 2011. As a result, housing equity, that is the value of housing assets less the total value of outstanding mortgage balances, has increased by £1.1 trillion from £1.5 trillion in 2001 to £2.6 trillion in 2011.

Overall, the value of housing assets in the North has risen by more than in the South of the country since 2001, increasing by 90% and 79% respectively over the decade. As a result, the South’s share of total UK private housing sector assets has fallen from 60% in 2001 to 58% in 2011. However, the South’s share of the UK’s housing assets has increased in the past five years from 55% in 2006 to 58% in 2011.

All 12 regions of the UK have seen a significant increase in the value of their private housing stock during the last ten years. The biggest increase was in Scotland where there was a 131% increase from £113.5 billion in 2001 to £262.6 billion in 2011, followed by the North with a rise of 102% from £50.5 billion to £101.8 billion. In Yorkshire and the Humber housing value has almost doubled to £236 billion from £119 billion in 2001, a rise of 98%. The smallest increases were in the South East at 68% and the West Midlands at 71%.

The large rise in Scotland is a combination of a 111% growth in house prices and a 16% increase in private housing stock, the biggest increases across the UK in both key components of the value of the housing stock.

‘The value of UK’s housing stock has soared in the decade to 2011 notwithstanding the decline in house prices seen since autumn 2007, rising by 84% to just under £4 trillion at the end of 2011,’ said Martin Ellis, housing economist at the Halifax.

‘Whilst outstanding mortgage debt has more than doubled over the last ten years, the value of the housing stock has risen by more in monetary terms. As a result, the total value of housing equity has shown a healthy increase. For most home owners housing is still very much the main store of private wealth,’ he added.

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@PeterMindenhall February 13, 2012 at 3:57 pm

That's a lot of words to basically say, "When a bunch of cheap credit is produced, house prices go up – then, when we realised that we couldn't predict the housing market, got our risk assessment wrong, several banks needed a bail-out and basically lent out too much cash and had to find new ways of lending cash – house prices fall."

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