UK housing value hit a record high of £8.68 trillion in 2022 with gains favouring owner-occupiers rather than landlords

With outstanding mortgage debt standing at £1.66 trillion, according to the latest Bank of England records, that meant net housing wealth exceeded £7.0 trillion for the first time last year, equivalent to almost 81% of the total value of UK housing. Of this, almost half – a record £3.34 trillion – was held by mortgage-free homeowners.

“The growth in house prices over the past three years has added considerably to the paper wealth of homeowners, driven in no small part by the well-documented ‘race for space’ over the period,” says Lucian Cook, Savills head of residential research. 

Though annual growth was lower than in the two preceding years, at £425 billion, it means a total of £1.625 trillion has been added to UK housing value over the past three years. 

“The total value of all housing has risen by almost a quarter (+23%) since 2019, while outstanding mortgage debt went up by a lower +11%. So, while outstanding borrowing increased by £168 billion, the growth in the total equity pot was well over nine times that figure at £1.46 trillion.”

Table 1: Total value of UK housing, and the annual change

Source: Savills Research, Bank of England   *Values rounded

A shift in who has benefitted

Owner-occupiers have been the major beneficiaries of this value growth, Savills says. According to their estimates, almost +40% of the growth over the past three years was enjoyed by those who have paid off their mortgage debt (+£645bn), while mortgaged owner-occupiers accounted for +34% of the increase (+£549bn).

According to Cook, a few key trends at play have created a shift in who has benefitted from house price growth over the past five years, concentrating the greatest gains in the hands of owner-occupiers. 

“Not only have we continued to see people who benefitted from the homeownership boom of the latter part of the 20^th century joining the ranks of the mortgage-free, but there’s also been a modest recovery in numbers of mortgaged homeowners, due to increased levels of first-time buyer activity over the period. 

“At the same time, however, we’ve seen pressure on privately rented housing stock levels, due to increased regulation and taxation despite rising tenant demand. As a result, growth in the total value of mortgaged owner occupied homes exceeded that seen across the private rented sector, reversing a trend seen over the previous five years.”

In the period from 2012 to 2017 the value of private rented stock grew by £495 billion, Savills estimates, somewhat more than the £443 billion growth in the value of homes owned by mortgaged homeowners. 

But over the five years to the end of 2022, the value of private rented stock rose by a much lower £222 billion, while mortgaged owner-occupier homes added a total £669 billion to their value.

Looking forward – 2022 a high point

“Though mortgage borrowing equates to less than a fifth of the nation’s housing stock value, the cost and availability of that debt will be crucial to the shape of the housing market over the next four or five years,” Cook says.  

“Recent figures from HMRC indicate that buying activity peaks among those in their 30s, with the under 45s accounting for 59% of all purchases. While the purchasing power of older buyers is more determined by the housing equity they have accumulated, younger buyers require finance which means the mortgage markets are the engine room of the housing market,” notes Cook. “Recent interest rate rises are going to continue put first time buyer and second stepper budgets under pressure in 2023 and 2024.

“Combined with the prospect of lower levels of house building, we expect that 2022 will represent a high watermark for the value of the nation’s housing stock for a few years.

“At the same time, activity among younger buyers that has improved in recent years is likely to come under more pressure, which will present a particular challenge for policymakers.”