Housing

The value of UK housing grew by £1m every minute in 2021

The UK’s property wealth grew to £5.2 trillion last year, according to the Equity Release Council, as rising house prices mean buying a home remains out of reach for millions.

house prices continue to surge

UK property wealth surged in 2021 but millions remain locked out of the housing ladder. Image: Super Straho / Unsplash

One million pound was added to the value of properties in the UK every minute last year as the pandemic boom continued to drive up house prices.

The UK’s total housing value reached £6.7trillion by the end of 2021, rising by £1.6bn each day according to analysis from the Equity Release Council. When mortgage debt is discounted, that leaves the UK with £5.2tn of property wealth overall. 

House prices have soared since the pandemic began and some homeowners have been capitalising, using equity release to draw an average of £125,000 from their homes – more than seven years of retirement income for many.

David Burrowes, chair of the Equity Release Council said: “After years of putting money away in bricks and mortar, older homeowners are turning the tables and taking funds from their homes in order to boost their retirement income, meet one-off costs and gift a living inheritance to family.

“With £1million added to the value of UK housing every minute last year, the options afforded by property wealth will feature in many people’s thoughts as they make financial plans for the future.”

The rise in property value comes as annual house price growth increased by 14.3 per cent, according to Nationwide Building Society analysis released last week.

The rise, which is the highest for 17 years, means the price of a typical UK home is now at a record high of £265,312 having grown by £33,000 in the last year.

Compared to when the pandemic began in March 2020, house prices are now more than 20 per cent higher overall and have surged in most regions across the country. Wales has experienced growth of around 15 per cent – the highest in the UK.

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The weakest growth has been in London where prices have grown 7.4 per cent in the last year – with changing working conditions during the pandemic seeing workers move away from the English capital.

Nationwide’s chief economist Robert Gardner said a combination of robust demand and limited stock of homes has kept prices moving skywards.

Many households have been able to capitalise on savings accrued during lockdowns to afford new homes. An estimated extra £190bn of deposits has been generated during the pandemic – working out at around £6,500 per household. But Gardner said the “older, wealthier households” made up the majority of those savings.

It remains difficult for people to get on the housing ladder, he added.

“It is becoming more difficult for existing homeowners to trade up, with the price gaps between different property types now at a record high. This is particularly acute for those looking to move from flats to terraced houses, where the price gap has more than doubled since the onset of the pandemic [from around £12,000 to over £25,000],” said Gardner.

“Nevertheless, we still think that the housing market is likely to slow in the quarters ahead. The squeeze on household incomes is set to intensify, with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high.”

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