The new millionaires' row?

John Willcock,Personal Finance Editor
Thursday 15 August 2013 22:13

Most homeowners in the United Kingdom will be millionaires within the next 40 years because of rising house prices, according to a new study.

Clicks'n'mortar might be a route to amassing millions if you are a large company. But for most of us, it will be bricks'n'mortar that will make us millionaires, the research shows.

Based on the average 6.6 per cent annual growth rates of the past 20 years, today's average house price of £79,393 will climb to a cool £1m by 2040.

The study was commissioned by BT Internet, BT's internet service provider. Ben Andradi, managing director, BT Internet and e-Business division, said: "For a nation obsessed with the rise and fall of house prices, these findings will make great dinner-party conversation."

The study says that saving your monthly income is the next most likely route to making a million.

Based on current average earnings of £400 gross per week or about £20,000 per annum, it will take the average worker 50 years to amass £1m. But this is without any wage growth, and without paying any income tax or National Insurance.

Allowing average earnings to increase by 6.4 per cent annually, as they have done during the past decade, the same worker will take just 24 years to amass £1m - but again only without paying taxes and by holding on to every penny.

However, before Brits put up their financial feet, the study warns that millionaires are getting poorer every year.

In fact, today's millionaires are up to nine times poorer than their Seventies' predecessors. You only needed £110,000 in 1970 to buy what £1m buys you in goods and services today.

With the slower inflation of more recent years, the contrast to millionaires of the Eighties is less stark. Today you need around £2.8m to buy what £1m would have bought you in goods and services in 1980. In the same way, you only needed £350,000 in 1980 to buy what £1m buys you today.

Of course, this analysis would all change if the UK were to join the European single currency.

A euro is currently worth about 60.2 pence, so at today's exchange rate you would only need £602,000 to be a euro millionaire.

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