Household wealth hit a record high last year thanks to historically low interest rates and tax breaks for property buyers.
The net worth of Britons rose to £11.2 trillion, up 8.4% in 2019 and the fastest rate of increase since the 2008 financial crisis, according to the Office for National Statistics. family.
Rapidly increasing land and property values contributed to 40% of the increase.
The ONS said the stamp duty cut, which drives up house prices, was a “likely” source of soaring land and property prices.
The housing market has been strong since last summer, when, in a bid to boost the economy, Rishi Sunak announced that the first £500,000 of a property purchase would be tax free . The bailout has been extended until the end of June this year, when it is halved to £250,000. In October, the threshold reverted back to £125,000.
The tax cut has boosted the real estate market. The price of the average home rose 10 per cent to £252,687 last month and is up 15 per cent since the coronavirus first emerged last March, according to a survey by the National Association of Builders. in this week.
Gold-plated pension and insurance funds contributed an additional 40% to the increase in household wealth. Growth was mainly driven by a fall in long-term bond yields, which increased the value of defined benefit retirement plans.
Lockdowns continue to raise household net worth as many white-collar employees are able to work from home on their full wages and thus preserve their cash. Other workers benefit from government income support programs, such as the furlough scheme.
Bank savings have increased at a record pace during the pandemic, with surplus cash continuing to move into financial assets. The ONS said “Currency and deposits” contributed 21.5% to household net worth growth as savings rates hit an all-time high.
The rise in household net worth stands in stark contrast to previous economic crises.
