04 Feb UK housing stock value climbs £5,000,000,000,000 as London becomes more dominant
The total value of the UK’s housing stock has risen slightly to £5 trillion over the past year, but housing wealth is becoming increasingly concentrated in London and the South East, according to a new report.
The total value of the UK’s housing stock has risen slightly to £5 trillion over the past year, but housing wealth is becoming increasingly concentrated in London and the South East, according to international real estate adviser, Savills, in their annual Valuing Britain analysis.
Ten years ago the UK’s housing stock was worth just £2.9 trillion, rising to £5.4 trillion at the peak of the market in 2007. However, the UK total value remains -6.4 per cent below peak, though London’s residential real estate is now worth 14.2 per cent more than in 2007, having risen by 6.8 per cent over the past year alone. At the other extreme, Northern Ireland’s stock is worth £72 billion, having fallen -10.2 per cent in the past year. (See below for full regional split.)
The capital’s homes are now worth an aggregate £1.12 trillion, accounting for 22.5 per cent of the UK’s housing value but just 12.2 per cent of total stock. The city’s value has risen by £140 billion over the past 5 years, and that value gain alone exceeds the total value of all homes across the whole of the North East of England. Here the total housing stock is worth just £128 billion, down 19.3 per cent from peak.
The extreme geography of property wealth
This reflects the fact that equity rich markets have outperformed the average and property wealth continues to be more and more polarised between North and South, and between different tenures.
Just ten London boroughs – Westminster, Kensington & Chelsea, Wandsworth, Barnet, Camden, Richmond, Ealing, Bromley, Hammersmith & Fulham and Lambeth – have an aggregate value equivalent to the total value of Scotland, Wales and Northern Ireland combined at just over £550 billion. Even within London, wealth is increasingly focused in core central and high value boroughs. The richest borough – the City of Westminster – has just 121,600 units, with a total value of £95 billion, more than twice the value of Edinburgh and almost three times that of Bristol.
And beyond the capital the analysis highlights some pockets of very concentrated housing wealth. For example, the high value commuter hotspot of Elmbridge in Surrey (which includes Cobham, Esher and Weybridge) has a housing stock value of £31 billion, more than that of Glasgow (£29bn), while that of Windsor and Maidenhead (£23bn) is slightly more than that of Cardiff.
Private rented sector gets major boost
The biggest total value gains have been seen in the private rented sector, where demand has risen sharply post credit crunch. Currently there are around 4.8 million private rented homes in the UK, up 61 per cent in the past 10 years. The value of that stock – which now totals £893 billion – has risen 153 per cent in the 10 year period, 13.4 per cent since peak and 5.7 per cent in the past year.
London’s dominance is even more pronounced in the private rented sector than in the owner occupied sector. The capital accounts for some 37 per cent of the UK’s total private rented stock value, putting it 36 per cent above the 2007 level.
At the owner occupier level, some £1.7 trillion of housing is now in the hands of owners with no mortgage debt. This is an increase of 76 per cent in the past 10 years, and 1.4 per cent in 2012. By contrast, mortgaged properties have a total value of £1.8 trillion, just 42 per cent higher than in 2002 and down -0.6 per cent on last year. This means that mortgaged owner occupied stock accounts for 37 per cent of the total value of UK housing compared to 44 per cent 10 years ago.
“These distinctions between North and South, and in particular between London and the South East and the rest, and the concentration of housing wealth in ever fewer hands, will have long term implications,” says Lucian Cook, director of Savills residential research. “It will affect people’s ability to get on the housing ladder, trade up or relocate In turn, it has implications for social and labour mobility and, ultimately, the economy.
“Our analysis also highlights growing value in the private rented sector, not least because demand continues to outpace supply. This will create investment opportunities for those with equity, and opportunities for institutional investors to meet the needs of those excluded from home ownership.”