The total value of wealth held by all households in the UK has risen by 127% over the past ten years... 

Net household wealth – i.e. following deduction for outstanding debt balances - increased from £2,795 billion at the end of 1996 to £6,336 billion a decade later.  Over the same period, retail prices have increased by 30% and average earnings have risen by 52%.

The total value of household assets rose by £4,343 billion between 1996 and 2006 from £3,284 billion to £7,627 billion. Household debt increased by £802 billion from £489 billion to £1,292 billion over the period.

The substantial rise in house prices has been a key factor driving the increase in household wealth over the past decade.  Housing equity (the value of residential properties minus mortgage debt outstanding) increased by £1,915 billion (244%) from £787 billion in 1996 to £2,702 billion in 2006.

Net financial assets (the value of financial holdings minus the value of outstanding consumer credit loans) rose by £1,625 billion from £2,009 billion in1996 to £3,634 billion in 2006.

Housing equity rising

Halifax Financial Services estimate that the value of housing assets exceeded the total value of outstanding mortgage balances by £2,702 billion at the end of 2006, representing a 244% (£1,915 billion) increase in housing equity over ten years.

Housing equity now forms 43% of households' total net wealth compared to 28% in 1996. Mirroring this rise, holdings of net financial assets fell from 72% to 57% between 1996 and 2006.

Balances of deposit based liquid savings have doubled in the past decade to £960 billion at the end of 2006.  Halifax Financial Services expects the total to exceed £1,000 billion (£1 trillion) by the end of 2007.

Deposit based savings account for around one quarter of total financial wealth held by households. Total financial savings are predicted to increase to over £4 trillion (£4,000 billion) by the end of the year. This is more than three times the level of household debt.

Table 1: Household Sector Wealth (£ billion)

Source: ONS, Bank of England, Halifax estimates

Martin Ellis, chief economist at Halifax Financial Services, commented: "The financial position of households in total has strengthened substantially over the past decade. 

“Whilst much has been said about the rise in debt, it is important to note that the value of households' assets has risen at a faster pace.  Housing has played an important part in increasing wealth, but there has also been a significant rise in the value of investments in financial assets in the last ten years."