After a rough period post the 2008 economic crash, the UK property market finally looked like it was finding its feet. But then along came Brexit, a property slump in London and a rising Bank of England base rate – all of whom have been accused of threatening to derail the market’s progress.
However, according to a report from the global real estate provider, Savills, the outlook doesn’t look too pessimistic with the value of the housing stock in the UK currently standing at £7.14 trillion – and equity making up over 80% of this total.
So what does £7.14 trillion mean to the UK?
To put this amount into some sense, it would be enough to buy up:
- The International Space Station
- The top 20 biggest UK housebuilders
- Oil the oil left in the North Sea
- All bitcoin in circulation
- Every company in the FTSE100 and FTSE250
- The top 15 mortgage lenders
- The English Premier League
So who owns what in this stock?
According to Savills, it’s private landlords and owner occupiers who are seeing the biggest growth in housing wealth. In fact, private landlords have seen their share more than double over the past ten years – with an increase of 111%.
As well as accounting for the rise of inflation in this period of time, it is a clear indicator of a massive growth in the private rented sector. Not only this, but there has been a significant growth in the amount of homeowners with no mortgage. According to the stats, this alone amounted to £2.5 trillion in 2017. While more and more older owner occupiers have cleared their mortgage debt, tighter restrictions set in place have reduced people’s ability to borrow – leading to an increase in rentals.
The amount of debt in UK property
Taking on a mortgage is taking on debt, but the amount of debt included in the £7.14 trillion only amounts to just 19% – the lowest it’s been in ten years.
This is down to a few reasons: more people have paid off their mortage, rising inflation means equity has grown and the Mortgage Market Review that came in after the global recession restricted the amount of debt taken on by a homebuyer.
Which means that 81% of the entire amount of housing stock is equity.
How HiP’s housing reform could benefit households across the UK
HiP’s purpose is to transform the property market. By democratising the whole process, and making property a type of currency, HiP will enable first time buyers to get on the property ladder easily, allow homeowners to tap into their property’s equity freely and help investors to choose from multiple opportunities with greater flexibility than ever before.
This £7.14 trillion then becomes something that is tangible. The £5.3 trillion that is equity in UK property could be accessed by homeowners to invest, renovate, give to family – or however they see fit. This flexibility creates a fluidity in property wealth that has not been seen before and has enormous potential not just in the UK, but all over the world.
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