UK asset value falls for first time since 1992

UK asset value falls for first time since 1992
The value of all the assets in the UK has fallen for the first time in more than a decade and a half, in the latest evidence of the economic trauma wrought by the financial crisis.

By Edmund Conway
Published: 6:39PM BST 03 Aug 2009


The fall was driven largely by a fall in the value of housing which, at £3.7 trillion, constitutes more than half the nation's net worth. Photo: PA Britain was worth £6.95 trillion at the end of 2008, down 2pc from the previous year, according to new figures from the Office for National Statistics (ONS). The total, which has fallen for the first time since the last recession in 1992, takes into account all buildings, roads, factories, cars, trains, machinery and financial assets by the end of 2008, minus debts.

The fall was driven largely by a fall in the value of housing which, at £3.7 trillion, constitutes more than half the nation's net worth.


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According to the ONS, the value of Britain's housing stock dropped by 9.1pc last year – the biggest fall since comparable data began in 1989. It takes the value of the total housing stock down to levels last seen in 2006.

More strikingly, the fall in property prices, when compared with the comparative height of mortgage debt, means that the equity British households own in their homes fell by £423bn, or 14pc, during 2008. Net equity – in other words the extent by which home values are greater than mortgage debt – dropped from 335pc to 274pc in 2008, the lowest cushion since 2002.

Simon Ward, of Henderson New Star, said: "UK households will have to step up their saving to compensate for the huge loss of housing and equity market wealth in 2008, implying mediocre prospects for consumer spending."

Significantly, it is households and non-profit institutions as opposed to financial and non-financial corporations that have borne the biggest brunt of the falls in asset prices. Their assets dropped from £7.5 trillion in 2007 to £6.6 trillion last year – the biggest single one-year drop on record.

Despite the fall, the value of the UK is still equivalent to just under £115,000 for every man, woman and child in the country – and has increased by a factor of more than five since the ONS began keeping national accounts data in 1948.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5967533/UK-asset-value-falls-for-first-time-since-1992.html