Landlords lose out as the UK’s housing wealth hits £8.68trn

Landlords lose out as the UK’s housing wealth hits £8.68trn

10:59 AM, 27th February 2023, About A year ago

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The total value of the UK’s homes reached a new record last year at £8.68 trillion, research reveals.

The findings from real estate firm Savills show that house prices saw a 5.1% year-on-year increase and with mortgage debt standing at £1.66 trillion, the net housing wealth in the UK exceeds £7 trillion for the first time.

However, over the last three years, the gains favoured owner-occupiers who have paid off their mortgage debt with a 40% growth in wealth at £645bn.

Mortgaged owner-occupiers accounted for 34% of the increase and they have seen gains of £549bn.

The value of private rented stock in the last three years grew by £495bn – and reverses a trend that saw the PRS worth more in the previous five years.

‘The nation’s housing stock value’

Lucian Cook, Savills’ head of residential research, said: “Though mortgage borrowing equates to less than a fifth of the nation’s housing stock value, the cost and availability of that debt will be crucial to the shape of the housing market over the next four or five years.

“Combined with the prospect of lower levels of house building, we expect that 2022 will represent a high watermark for the value of the nation’s housing stock for a few years.

“At the same time, activity among younger buyers that has improved in recent years is likely to come under more pressure, which will present a particular challenge for policymakers.”

Who has benefitted from house price growth?

According to Mr Cook, there are some key trends that have created a shift in who has benefitted from house price growth over the past five years – with the largest gains being seen by owner-occupiers.

He said: “Not only have we continued to see people who benefitted from the homeownership boom of the latter part of the 20th century joining the ranks of the mortgage-free, but there’s also been a modest recovery in numbers of mortgaged homeowners, due to increased levels of first-time buyer activity over the period.”

He added: “At the same time, however, we’ve seen pressure on privately rented housing stock levels, due to increased regulation and taxation despite rising tenant demand.

“As a result, growth in the total value of mortgaged owner-occupied homes exceeded that seen across the private rented sector, reversing a trend seen over the previous five years.”

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