British households richer than ever

Household wealth has hit an average £86,000 each, totalling more than £7 trillion overall

In a week where families faced with axed tax credit and benefits will feel noticeably out of pocket, it’s been revealed that Britons are in fact richer than they’ve ever been.

Net wealth now stands at an average £86,000 a household, as overall wealth has soared past the £7 trillion mark for the first time, according to research from Lloyds TSB Private Bank.

Household wealth has grown by 62% over ten years, considerably faster than disposable incomes at 44%, which is why many may not feel as rich as the figures suggest.

Furthermore, over half of financial assets contributing to household wealth are not accessible, as they are tied up in life insurance and pensions.

“Much of the increase came during the 'boom' years prior to 2007 when the economy grew rapidly, with rising employment and incomes,” commented Nitesh Patel, economist at Lloyds TSB Private Banking.

The estimates include the value of residential property and financial assets, minus outstanding debts, including mortgages.

Despite the tough state of the economy, there has been an overall £2.71 trillion increase in wealth over the past decade.

The rise is largely thanks to an increase in financial assets, such as savings, Government bonds, investments, shares, life assurance and pensions – contributing £1.7 trillion to the overall rise.

Housing wealth increased by £1 trillion since 2002, as the value of property has risen by more than the increase in mortgage debt.

The leap in house prices up until 2007, along with an increase in the number of privately owned homes, saw the value of the UK's private housing stock almost double in value from £2.6 trillion in 2002 to £4.2 trillion in 2012.

While the value of mortgage debt soared from £675 billion in 2002 to £1.3 trillion - an increase of 87%, Average annual growth in mortgage debt slowed to just 1% a year since 2008.

Those who invested in the stock market are likely to be among the better off, as investments in equities have increased by a fifth over the past decade to £35 billion overall.

But there is a large divide in the distribution of wealth.

"The wealthiest 10% of households hold 22 times more wealth, on average, than those in the bottom half," said Patel.