Massive Drop in Household Wealth

The ongoing recession and the global financial crisis has hit households in many ways, and has made a real impact on household finances. However, a recent report has shown just how deeply average household wealth has been affected by these factors, with recently released figures showing that average households in the UK saw £31,000 wiped off their wealth last year.

A number of different areas have been negatively affected by the recession and the financial crisis, and this includes property values, equity, and share values, all of which have hit household wealth hard. Over £420 billion was wiped off the UK’s housing wealth collectively, and over £390 billion was wiped off share values as a result of the financial climate.

The figures used to calculate these losses came from the Office for National Statistics and the Bank of England. It is estimated that collectively UK households lost £815 billion from their household wealth over the course of last year, and this reflected a drop of 12 percent. One industry official said that this was a huge drop in the space of just one year, but that it was down to significant drops in house prices, equity, and share values.

Officials have said that for most households their wealth is tied up in their property, shares, pensions, and investments, and all of these areas have taken a massive knock because of the difficult financial climate and the recession, which has resulted in the paper wealth of households being adversely affected in this way.

On the upside figures have also revealed that over the course of this year so far there has been improvement in household wealth levels across the UK, with the financial and property markets showing signs of improvement, and with share values rising again. One expert said that the overall picture for household wealth was likely to be far healthier this year than it was last year.

However, according to reports not all households will enjoy this good news, as many may now have been affected by other factors such as job losses resulting from the recession or having their final salary pensions stopped and moved to a less stable investment.

Louise Ward has been a consolidation loans expert since 2001 and works for Loans4.co.uk, a company specialising in consolidation loans and homeowner loan solutions. Visit http://www.loans4.co.uk/ today for expert advice and consolidation loans.