Building Societies Association
The Office for National Statistics has published a new Wealth and Assets Survey that looks at the wealth of private households in Great Britain. This survey investigates various areas relating to household wealth that might be of interest to building societies. Over 30,000 households were surveyed between July 2006 and June 2008. Therefore, the results might have changed as a result of the subsequent recession.
ONS 2006/08 Wealth and Assets Survey (pdf)
Total household wealth was estimated to be £9 trillion, made up of net property wealth (39%), pension wealth (39%), financial wealth (11%) and physical wealth (ie. belongings) (11%). Median total wealth was estimated to be £204,500, or £145,400 excluding pension wealth.
Net financial wealth
Median household net financial wealth was £5,700. This comprises current and savings accounts and other investments, net of financial liabilities. There is quite a skewed distribution of financial wealth, with the distribution being more unequal than that of property or physical wealth. In 2006-08 the wealthiest 20% owned 84% of total net financial wealth and the poorest half owned just 1% of net financial wealth. As might be expected, net financial wealth was higher in households where the head was older, better educated or in a high socio-economic classification.
For 75% of households net financial wealth was positive – financial assets were greater than liabilities, but for 23% of households liabilities were greater than assets.
An estimated 96% of households have a bank account or some kind of financial investment. 92% had a current account, and 62% had a savings account, and 36% had a Cash ISA.
| Proportion of households with formal financial assets: 2006/08: | ||
| Great Britain | Percentages | |
| Current accounts incl overdrafts | 92.2 | |
| Of which overseas current accounts | 2.6 | |
| Current accounts excl overdrafts | 84.7 | |
| Savings accounts | 61.9 | |
| Of which overseas savings accounts | 1.5 | |
| ISAs1 | 41.7 | |
| Cash ISAs | 35.8 | |
| Stocks and shares ISAs | 10.1 | |
| National Savings certificates and bonds2 | 23.7 | |
| UK shares | 14.9 | |
| Insurance products3 | 10.5 | |
| Fixed term bonds | 8.3 | |
| PEPs4 | 7.3 | |
| Employee shares and share options | 7.3 | |
| Unit/Investment trusts | 5.9 | |
| Overseas shares | 1.9 | |
| UK bonds/gilts | 1.1 | |
| Overseas bonds/gilts | 0.1 | |
| Other formal financial assets | 0.4 | |
| 1 | Individual Savings Accounts; note that households may have both cash ISAs and stocks and shares ISAs, so total is not the sum of cash plus stocks and shares ISAs. | |
| 2 | Including Premium Bonds. | |
| 3 | Excluding life insurance policies which only pay out in the event of death. | |
| 4 | Personal Equity Plans. | |
| Source: Wealth and Assets Survey, Office for National Statistics | ||
10% of households have informal financial assets, including cash at home, money lent to someone or given to someone to look after or money paid into a savings club.
Property wealth
68% of households owned their home, with 30% owning their home outright. 6% of households owned other property in the UK. The median value of property owned was £196,000. After mortgage loans, the net value of property wealth was £150,000 among property owners.
Attitudes to finance
The survey findings also back up a number of conclusions from behavioural economics. People were predominantly averse to risk, with 78% saying that they would prefer a guaranteed £1,000 rather than a one in five chance of winning £10,000. Also, people had short financial time-horizons, with 80% preferring to receive £1,000 today rather than £1,100 in a year’s time. The majority of respondents had both high risk aversion and short time-horizons.
Respondents identified as having a strong orientation not to spend were much more likely to say they would wait the year for £1,100 rather than taking £1,000 now than were people identified as having a strong orientation to spend.
Propensity to save
37% had saved from their income in the last month, but 13% had not saved from their income in the last year, and 35% had never saved from their income.
When people had money left over at the end of the week or month, 46% put it into or left it in their current account, 23% saved it in a savings account, 11% put it in their current account then saved or invested it, and 11% spent it.
The main reasons for saving were to cover unexpected expenditures (57%), for holidays or leisure (49%), to cover a future planned expense (33%), to provide income for retirement (20%), for the return (19%) or for other family members (19%).
| Main reasons for saving1: 2006/08: | ||
| Great Britain | Percentages | |
| For unexpected expenditures | 57 | |
| For holidays or other leisure/ recreation | 49 | |
| To cover a planned expense in the future | 33 | |
| To provide income for retirement | 20 | |
| To see my money grow/ good interest rates/ speculation | 19 | |
| For other family members | ||
| (including for gifts or to leave an inheritance) | 19 | |
| For a deposit to buy a property | 6 | |
| As speculation/ recreational | 6 | |
| To provide regular income over the next 12 months | 6 | |
| Other reasons | 3 | |
| No. of responding individuals | 24,508 | |
| 1 | Adults who had saved in the last 12 months. | |
| Source: Wealth and Assets Survey, Office for National Statistics | ||
