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Property rises to 46% of household assets

The surge in property prices over the last eight years has seen housing leap ahead of pensions, insurance and equities as a proportion of household savings.

A report from the Office for National Statistics shows the value of residential property held by households soared from 1,200bn to 3,200bn between December 1996 and December 2004.

Housing accounts for 46 per cent of household assets compared with 34 per cent in 1996.

The proportion of insurance and pension policies has fal- len from 30 per cent of household assets to 24 per cent.

The proportion of household assets invested as deposits with banks and building societies dipped slightly from 13 per cent to 12 per cent while equities shrank from 11 per cent to 7 per cent.

The value of assets excluding housing rose by 53 per cent from 2,078bn to 3,179bn but, with housing included, the total almost doubled from 3,600bn to 7,000bn in 2004.

Building Societies’ Association director-general Adrian Coles says: “The statistics show a fundamental change in the nature of households’ savings over the last eight years. Despite the rapid growth in borrowing, savings have increased in absolute terms. Of course, this tells us nothing about whether individual households have over-borrowed.”

Bestinvest business development manager Justin Modray says: “For the last 10 years, people have been paying more and more to get on the property ladder. With hefty mortgages, they do not have much left to save. This is a worrying trend as there is a whole generation of people potentially banking on their properties to retire.”

CHANGEs In HouseHOLD Assets from 1996 to 2004source: Office for National Statistics1996 2004

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