The property boom inspired by Chancellor Rishi Sunak’s stamp duty holiday has triggered a surge in national wealth to £10.5 trillion, despite the economy being hit by the worst recession in over 300 years.
The Office for National Statistics’ latest snapshot of the UK’s balance sheet showed the fastest growth in the nation’s net worth – including land, buildings and financial assets – since 2016.
The £400bn or 4.4pc jump in national wealth – an average of £158,000 for everybody in the UK – was driven by households thanks to burgeoning house prices and land values.
Households’ net worth grew 9.1pc, or nearly £1 trillion, to £11.4 trillion over the year as land values rose and average house prices jumped 8.1pc – the fastest rise for seven years.
A surge in savings after lockdowns restricted spending also bolstered household balance sheets as well as a fall in government borrowing costs, which enhanced the value of pension pots.
The rising household wealth came in the teeth of a 9.8pc slump for the economy in 2020, the worst sine the Great Frost of 1709.
Richard Heys, the ONS deputy chief economist, said: “Despite the pandemic and recession, the net worth of the UK rose strongly in 2020, led by households. The total value of our households benefited from rising house prices, with stamp duty changes probably a key factor.
“An increase in the total value of defined-benefit pension schemes also contributed, while the sharp rise in the savings ratio during the pandemic helped boost households’ cash deposits.”
The stamp duty holiday on purchases below £500,000 was extended until June by the Chancellor in March after a Telegraph campaign and will be tapered back before the tax returns to previous rates in October.
The figures underlined how the public sector has shouldered the burden of the pandemic shutdowns as the gains for households far exceeded the £350bn hit to central government’s net worth driven by a soaring deficit.
The impact of Covid was also felt on the nation’s capital stock as housebuilding and business investment suffered in the pandemic.
The nation’s asset base was estimated at £4.5 trillion last year but expanded by just 0.6pc, its weakest growth since 2015.
The ONS said the damage was done by a 38pc fall in housing construction during the first lockdown, as well as a 31pc fall in other buildings and structures, which remains below pre-pandemic levels.