The total value of assets in the UK breaks the £10tn threshold for the first time buoyed by land, the government says, writes Arun Kakar
The total value of the UK – including all assets excluding liabilities – has risen by £492 billion from 2016 to reach £10.2 trillion, according to the annual bulletin from the Office of National Statistics.
Giving the average person a net worth of £155,000, government statisticians attribute the main cause of growth to a £610 billion increase in the value of non-financial assets – mainly land.
This was by some distance the largest contributor to the rise – worth £450 billion – since 2016. In the household sector alone it was worth £4.1 trillion – a rise of £302 billion from the year before, representing 76 per cent of total UK land value.
The value of household land in the UK has risen from 21 per cent of total net worth in 1995, and peaked at 41 per cent in 2007, before and slipping slightly since to 40 per cent, in the latest report.
Photo credit David Hollman @WikiCommons
Meanwhile total land value in 2016 in the UK was 51 per cent of national net worth compared with an average of 39 per cent across four G7 countries – Germany, France, Canada and Japan. The UK sits 9 percentage points above second-placed France and is almost double that of Germany (26 per cent). Land is currently worth more than all of the UK’s non-financial assets combined.
On the other hand, the value of the UK’s financial assets and liability dropped £117 billion in value over the year, sinking to a deficit of £165 billion. It marks the largest yearly decrease in financial net worth since 2012, and is attributed to the decrease in the net value of loans, a contrast to 2016, when loans increased financial net worth by £197 billion. Net worth dropped by £348 billion in the private non-financial corporations sector, and equity and investment fund shares fell by £220 billion due to rising liabilities.
Total government net worth in 2017 was negative £689 billion, but saw its largest rise on record – an increase in £74 billion from 2016 - making the year as one of only two since the economic downturn where net worth rose. Central government meanwhile saw its net worth slip by £6 billion in 2017 compared to £240 billion in 2016, which was affected by liabilities in debt securities.
‘Today’s figures give a new estimate of the total value of land, housing, machinery and financial assets held in the UK by individuals and companies, ‘ says Daniel Groves from the National Accounts and Economic statistics office at the ONS. ‘The increase in the net worth of the UK was driven by continued increases in the value of housing and land.’
The ONS report notes that the main cause of the differences in land value between countries relates to domestic housing cycles. However it is tempting to note that the UK has the second-highest population density of G7 countries, after Japan, and has the highest land value of the listed countries.
While some – notably Sky News’s economics editor Ed Conway may scoff at the meaning of such valuations, Spear’s readers may take some comfort in knowing that the total assets held in the UK are heading north: notwithstanding Brexit wobbles and the decline of the pound. And if nothing else, the continuing rise in the value of the land, does seem to prove Mark Twain’s dictum, however: ‘Buy land, they aren't making it anymore.’
Main photo: Keith Yahl @Flickr