London House Prices Help Drive Wealth Creation in Britain

(Bloomberg) -- London accounts for just one in eight properties owned in England but their impact on the wealth of the country is dramatic.

Figures from the Office for National Statistics Thursday showed median net property wealth for households in London was 351,000 pounds ($499,000) between 2014 and 2016, a 33.5 percent increase from the previous two years. The overall value of property in the British capital, where house prices are double the national average, jumped by 38 percent to just over 1 trillion pounds. 

“The increase in property values in London seems to be one of the main reasons for the increase in aggregate household total wealth in Great Britain,” the ONS said in a report.

Total household wealth rose by 15 percent to 12.8 trillion pounds, with the increase being driven by property values and a 20 percent surge in private-pension wealth, the ONS said.

Wealth was highest in London and southeast England and the richest 10 percent of households were worth five times more than the bottom 50 percent combined.

“Britain is very good at generating wealth, but terrible it spreading it around the country and even worse at taxing it properly,” said Conor D’Arcy, senior policy analyst at the Resolution Foundation think tank. “As a result, we have unacceptably high levels of wealth inequality.”

That gap may be set to narrow marginally. London house prices fell last year, making the capital the worst-performing housing market in the U.K. for the first time in more than a decade, according to Nationwide Building Society.

To contact the reporter on this story: Andrew Atkinson in London at a.atkinson@bloomberg.net.

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Lucy Meakin, David Goodman

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