The wealth of the UK property market has plummeted during the recession, which has given rise to further claims and evidence of the scale of the housing market slump. Figures have been published by the Office for National Statistics (ONS) that show net household property wealth for all the private households in the UK has decreased by over £131 billion between 2006/08 and 2008/10.
Percentage wise that represents a 3.7% drop, however it is in monetary terms that we can really understand this decline.
The total value of property in the UK fell from £3.506 billion to £3.375 billion. Furthermore, the average net property wealth for individual households fell from £204,000 to £195,000 during this same period. Meanwhile, the gross value of a main property declined from £231,000 to £224,000 and an average mortgage on a primary property rose from £88,000 to £92,000. That means we now need more money to be able to afford a property that is worth less than it used to be. Rather ironic, and worrying.
The figures were revealed in the ONS’s Wealth in Great Britain report. This report compared two two-year studies and also put into monetary terms the dull state of the UK property market.
The report has also found that net property wealth has fallen in all regions except Scotland and the South West of England. In these areas there was little change between the two two-year studies.
The report interestingly found that household physical wealth has risen between both two-year periods. Household physical wealth includes household contents, collectables and vehicles, and this rose from £51 billion to £1,012 billion, which is surprising considering the financial crisis the country has been embroiled in.
The average physical wealth per household has also risen from £39,100 to £40,900. This is again a rather interesting statistic when we are still amidst a financial crisis.
With property prices having dropped, it also shows that recent years will have represented valuable gains for landlords who may have expanded their property portfolios. Such landlords will of course have had expenses elsewhere though, such as additional landlord insurance, increased tax payments, and further maintenance costs.
Landlords may also now be looking to expand property portfolios whilst prices remain lower. How long will it be until they begin rising steadily again? 2012 seems like it will be another flat year for the housing market, however, we will just have to wait and see!