The total value of the UK’s housing stock has risen slightly to £5 trillion over the past year, but housing wealth is becoming increasingly concentrated in London and the South East, according to a new report.

Ten years ago the UK’s housing stock was worth just £2.9 trillion, rising to £5.4 trillion at the peak of the market in 2007. However, the UK total value remains 6.4% below peak, the annual Valuing Britain report from international real estate adviser Savills shows.

However, London’s residential real estate is now worth 14.2% more than in 2007, having risen by 6.8% over the past year alone. At the other extreme, Northern Ireland’s stock is worth £72 billion, down 10.2% in the past year.

It means that London’s homes are now worth an aggregate £1.12 trillion, accounting for 22.5% of the UK’s housing value but just 12.2% of total stock. The city’s value has risen by £140 billion over the past five years, and that value gain alone exceeds the total value of all homes across the whole of the North East of England.  Here the total housing stock is worth just £128 billion, down 19.3% from peak.

Savills says that this reflects the fact that equity rich markets have outperformed the average and property wealth continues to be more and more polarised between North and South, and between different tenures.
 
Just 10 London boroughs, Westminster, Kensington & Chelsea, Wandsworth, Barnet, Camden, Richmond, Ealing, Bromley, Hammersmith & Fulham and Lambeth, have an aggregate value equivalent to the total value of Scotland, Wales and Northern Ireland combined at just over £550 billion.

Even within London, wealth is increasingly focused in core central and high value boroughs.  The richest borough, the City of Westminster, has just 121,600 units, with a total value of £95 billion which is more than twice the value of Edinburgh and almost three times that of Bristol.

And beyond the capital the analysis highlights some pockets of very concentrated housing wealth. For example, the high value commuter hotspot of Elmbridge in Surrey, which includes Cobham, Esher and Weybridge, has a housing stock value of £31 billion, more than that of Glasgow’s £29 billion, while that of Windsor and Maidenhead at £23 billion is slightly more than that of Cardiff.

The biggest total value gains have been seen in the private rented sector, where demand has risen sharply post credit crunch. Currently there are around 4.8 million private rented homes in the UK, up 61% in the past 10 years. The value of that stock, which now totals £893 billion, has risen 153% in the 10 year period, 13.4% since peak and 5.7% in the past year.

London’s dominance is even more pronounced in the private rented sector than in the owner occupied sector. The capital accounts for some 37% of the UK’s total private rented stock value, putting it 36% above the 2007 level.

At the owner occupier level, some £1.7 trillion of housing is now in the hands of owners with no mortgage debt.  This is an increase of 76% in the past 10 years, and 1.4% in 2012. By contrast, mortgaged properties have a total value of £1.8 trillion, 42% higher than in 2002 and down 0.6% on last year. This means that mortgaged owner occupied stock accounts for 37% of the total value of UK housing compared to 44% 10 years ago.

‘These distinctions between North and South, and in particular between London and the South East and the rest, and the concentration of housing wealth in ever fewer hands, will have long term implications,’ said Lucian Cook, director of Savills residential research.

‘It will affect people’s ability to get on the housing ladder, trade up or relocate. In turn, it has implications for social and labour mobility and, ultimately, the economy.  Our analysis also highlights growing value in the private rented sector, not least because demand continues to outpace supply. This will create investment opportunities for those with equity, and opportunities for institutional investors to meet the needs of those excluded from home ownership,’ he added. 

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