Quality | 2009.12.11
Household wealth study reveals chasm
Office for National Statistics report says Scots have least wealth – and Londoners\' assets are surprisingly modest
Average household wealth in the south-east of England is almost twice that in Scotland, according to the Office for National Statistics\'s first "wealth in Great Britain" report, which also found that London was not as wealthy as you might think.
The ONS painted a detailed picture of affluence and borrowing habits after collecting evidence from 31,000 households across Britain and estimating the value of their housing, pension investments and other possessions.
Its report, published todayfound that the theory held by some that the north-south divide was slowly fading was not borne out by the facts. By far the wealthiest area in 2006-08 was the south-east of England, with median household wealth of £287,900, while Scotland was the worst off, with a median of £150,600.
Scotland was closely followed by the north-east and the north-west, which had a median household wealth of £169,500 and £168,200 respectively.
London, home of the City, was surprisingly little more wealthy than the north, with median assets per household of £173,400. The ONS said that this was explained by the fact that despite its high level of affluent residents, London also has the highest rate of non-property owners.
According to the survey, households were worth an average of £204,500 in 2006-08. But the least wealthy half of households accounted for only 9% of wealth, while the richest 20% owned 62%.
For many of the respondents to the ONS\'s survey, accumulating a healthy portfolio of assets was a distant dream: the least wealthy 10% of households had negative total net wealth – owing more on their mortgages or other loans than their properties and other goods are worth.
A quarter of people also thought they could get money from their property if they needed to, either by downsizing or moving to a cheaper area, although only 3% thought they would borrow more money against the value of their home.
Although the report was compiled before the financial crisis, it reveals many consumers\' reliance on debt to fund their day-to-day living costs, which left the economy vulnerable when the downturn came. More than a third of respondents said they had never saved, while three-quarters of households had unsecured credit facilities, such as a credit card or store card, and 48% had unsecured debt, owing an average of £2,700 each.
Younger households were most likely to have unsecured debt, with households headed by someone aged between 25 and 34 owing an average of £3,700 through credit cards, loans and store cards.
Even before the crisis, around 15% of households that owed money on one or more credit or store cards admitted they had been unable to meet their minimum repayments, and 10% of households were in arrears on at least one financial commitment.
When the financial crisis hit banks and other businesses focused on the capital, some hoped recession could narrow the gap between rich and poor areas of the country; but recent evidence shows that the housing market in the south has bounced back more rapidly.
An analysis by Matthew Oakeshott, the Liberal Democrat Treasury spokesman, of homes sold at auctions across the country revealed that the average price of a house sold at auction fell by 12% in the Midlands, the north, Scotland and Wales in the third quarter of 2009, compared with the same period of 2008, whereas prices in London and the south rose by 12%. "It\'s a mirror image," said Oakeshott. The average price of a house sold at auction in the south stands at £178,459, while in the north it is £86,495.
Oakeshott puts the recovery in London down to the bonus effect. "Across most of Britain the recession is biting, unemployment is going up and house prices are going down. The recovery started in London but it\'s not trickling down. There are no bankers\' bonuses in Barrow."
The ONS report found that UK households were worth a total of £9tn in 2006-08, with 39% of that money tied up in bricks and mortar and another 39% in private pensions.
For more information, please visit
http://www.guardian.co.uk/uk/2009/dec/10/ons-report-uk-wealth
