The total value of all homes across the UK reached a new high of £8.68trn at the end of 2022, new research by Savills has indicated.

This latest figure represented a 5.1% year-on-year increase.

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

Though annual growth was lower than in the two preceding years, at £425bn, the Savills research highlighted that this still means a total of £1.625trn has been added to UK housing value over the past three years.

Savills head of residential research, Lucian Cook, said that 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 “race for space”.

“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%,” Cook said. “While outstanding borrowing increased by £168bn, the growth in the total equity pot was well over nine times that figure at £1.46trn.”

Savills also stated that owner-occupiers have been the major beneficiaries of this value growth,. According to its 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).

Cook suggested that “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 twentieth 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,” Cook said.

“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 between 2012 to 2017, the Savills estimates show that the value of private rented stock grew by £495bn, a figure up on the £443bn growth in the value of homes owned by mortgaged homeowners.

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

“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,” added Cook.

“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.

“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.”

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