Britons may be £1.45trn in debt but they are worth £9trn, says ONS study

Data from new research reveals huge North-South divide in household wealth
Click to follow
The Independent Online

Recession-hit Britons may feel poorer after this week's pre-Budget report, but their total domestic wealth still stands at £9trillion, more than enough to dwarf their £1.45trn of outstanding debts.

A report produced for the first time by the Office for National Statistics (ONS) has totted up the total net wealth of UK households, including money held in private pension plans but excluding both state pensions and any business assets owned by family members. Of the headline total of £9trn, 39 per cent of it is tied up in property, 11 per cent in financial wealth and the remaining 11 per cent in physical possessions.

Average wealth per family comes in at £204,500, or £145,400 when private pensions are excluded. But there are marked imbalances between the haves and the have-nots. The wealthiest 10 per cent of households are 4.8 times richer than the bottom 50 per cent. And while the wealthiest 20 per cent account for 62 per cent of Britain's total wealth, the least well-off half hold only 9 per cent. At the bottom of the heap, the poorest 10 per cent of families are in debt in terms of both financial and property wealth.

Everyone has at least some physical wealth wrapped up in possessions. The average value is just shy of £30,000 – of which £25,000 is house contents. But when it comes to purely financial wealth, the super-rich have it all sewn up. The wealthiest 20 per cent account for 84 per cent of the UK's net financial wealth, while the poorest 50 per cent own just 1 per cent of the net wealth.

By far the biggest chunk of the nation's wealth is held in property. More than two-thirds of Britons own their homes, which have an average value of £190,000.

Thirty per cent of homes are owned outright and 38 per cent are mortgaged. Net property wealth is also more evenly balanced than financial or private pension wealth.

Although the wealthiest property owners are concentrated mostly in London and the South-East of England, the capital also has the lowest proportion of homeowners of any English region. However, it is a different story in the South-East, where 74 per cent of families own their homes, helping to push the region's average wealth to £287,900, the highest in Britain and way above the £168,200 median in the relatively impecunious North-West.

Qualifications also help to boost a person's wealth. Graduates produce the highest average household wealth of £400,200, while those no qualifications are worth just £105,100. Although the self-employed make up the wealthiest households, with £283,200, retired people are second with an average wealth of £268,600.

On top of home loans, 48 per cent of families have other debts such as credit cards and store cards, with average borrowings of £1,500. Excluding mortgages, the most indebted households are those headed by someone aged between 25 and 34. The only caveat to the ONS data is that it covers the period from July 2006 to June 2008, before the worst of the financial crisis that followed the collapse of Lehman Brothers in September 2008.

In March, accountants at PricewaterhouseCoopers estimated almost £2trn had been wiped off people's personal wealth by plummeting property and stock prices, although there has been a significant recovery since then. John Hawksworth, head of economics at PWC, said: "A significant chunk of the losses we found in March will have been recouped by now – but not all of them."