During one of the most potent economic contractions in the last three centuries, British household wealth grew notably as a result of rising housing capital values, insurance and pension schemes, as well as savings and bank deposits, according to statistics from ONS.
In the second greatest growth phase since the 2008 financial crisis, household wealth grew 8.4 per cent to a record £11.2 trillion over the course of 2021. A Knight Frank report reveals that land and property propelled 40.1 per cent of this increase, whilst currency and banking deposits accrued 21.5 per cent on account of record savings made during the pandemic.
The property price surge was common across the globe with capital values rising 9.2 per cent in the first half of the year in 55 countries. This was split across the developed world gaining 12 per cent, and the developed world gaining 4.7 per cent. A low interest rate macroeconomic environment combined with interventionist fiscal policies served to stabilise markets and reassure investors.
It is estimated that over a third of investors place their investments into property, this grows to over 50 per cent in Asia, according to Knight Frank wealth managers. This capital tends to be attracted to safe global cities near prestigious schools, universities and cultural amenities, such as in London. Especially given the sterling’s drop in value, wherein £1m was worth $1.59m on 1 Jan 2015 but dropped to $1.37m by the same period in 2021.
Looking ahead, seasonal competitive intensity is expected in the run up to spring given the pent up demand prevalent in the market. UK sales instructions were on par with five year averages between 2015 and 2019 however down 25 per cent relative to 2020. Key urbanisation, race for space, and first time buyer participation trends will have the opportunity to play out as interest rate rises loom.
“Dollar buyers are currently more dominant in the UK market than I’ve ever seen in my 20-year career. This has been the case for the last three , but even more so in 2021” Marcus Bradbury-Ross, Head of Private Office at CBRE