Value of UK housing soars by £1.8 trillion in past decade

New research from Halifax shows that the value of the UK's private housing stock rose by 84% to £1.8 trillion in the decade to 2011.

The value of the housing stock at the end of 2011 is estimated at £3.9 trillion, up from £2.1 trillion in 2001

This 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.

Decline in last five years

But the picture changes when looking at the value of housing stock since 2007, as 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 - a decline that is nonetheless more than compensated for by the significant increases in the half decade prior to 2007.

Housing equity

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 by 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 - 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.

North-South divide

Over the decade North-South divide has narrowed. Overall, the value of housing assets in the North has risen by more than in the South since 2001, increasing by 90% and 79% respectively over the decade.

The North includes Yorkshire & the Humber, North, North West, Scotland, Wales, Northern Ireland, East Midlands and West Midlands. While the South consists of London, South East, South West and the East.

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.

Regional rises

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 £113.5bn in 2001 to £262.6bn in 2011.

This was followed by the North with a rise of 102% from £50.5bn to £101.8bn. In Yorkshire and the Humber housing value has almost doubled to £236bn from £119bn in 2001 (98%).  The smallest increases were in the South East (68%) and the West Midlands (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.

Comment

Martin Ellis, housing economist at Halifax, commented: "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.

“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 homeowners housing is still very much the main store of private wealth."