You’ve Never Had It So Good – Really…

Harold MacMillan was wrong when he told Britain that the country had never had it so good in his 1957 optimistic speech because households are better off now than ever before.

Since 2004, despite the credit crunch, crippling national debt and the economy nose diving, household wealth has surged by £3.9 trillion to £9.1 trillion at the end of 2014.

Last year added £1.5 trillion to national wealth.

In simple terms, each household in Britain is an average £126,572 richer since the start of 2004.

The research was compiled by Lloyds Bank Private Banking.

The bank explained that wealth has increased faster than prices, with the retail price index rising 31% between 2004 and 2014, while disposable income has increased by 42%.

Highest ever household wealth

The study puts swelling household wealth down to a combination of rising property prices and an increase in the value of financial assets.

Last year saw the highest annual increase in household wealth since records started in 2001. House prices were up 9% and contributed around a third of the £1.5 trillion rise in wealth.

A significant surge in the value of financial assets contributed the rest. These assets include cash in banks, building societies and pension funds. Government gilts than underlie many of these assets helped the rise in wealth as values increased by a fifth.

The bank also pointed out that households are becoming less reliant on property prices for their wealth as financial assets grow in value.

Cash locked in home equity accounts for 39% of household wealth – down from 45% in 2004 – while other financial assets have increased from 55% to 61%.

Rich man, poor man gap widens

As the value of homes has increased, mortgage debt has also grown.

Between 2004 and 2008, which was the year the credit crunch gripped the country, mortgage debt mushroomed by £90 billion a year. The rate has slowed to £12 billion a year as lenders tightened up on how much they advanced to borrowers.

Markus Stadlmann, chief investment officer at the bank said: “Since 2004, homes and financial assets have seen significant increases in value despite falling back during the credit crisis. This has boosted household wealth to almost £4 trillion.

“However, a gap is also widening between the richest and poorest households.”

Between 2010 and 2012, the top 20% wealthiest households were worth 105 times more than the poorest 20% – equivalent to 63% of Britain’s household wealth.

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