The Geography of Housing Wealth and Inheritance in Britain

Abstract

H OUSING WEALTH HAS BECOME increasingly important in Britain over the last 30 years, both as a share of total personal wealth and in terms of its impact on individual households. There are two main reasons. First, Britain has witnessed a major expansion of homeownership post war. The number of owner-occupied dwellings in Britain rose from 3.9 million in 1951 to 15.4 million in 1991 and the proportion of home owners rose from 31 per cent in 1951 to 67 per cent in 1991. Second, the 1970s and 1980s were periods of rapid house price inflation. National average house prices rose from ?5000 in 1969 to ?60000 in 1989, an increase of 1100 per cent in nominal terms and an increase of 2.5 times in real terms (Holmans, 1990). As a result of these trends, and because the price of housing has risen faster than the price of other assets, housing now accounts for a much larger share of personal wealth than it did in the early post-war years. The Royal Commission on the Distribution of Income and Wealth (1977) estimated that in 1975 housing accounted for 35 per cent of net personal wealth compared to just 17 per cent in 1960. By 1988 the proportion had risen to over half (52 per cent) (Inland Revenue, 1990). Housing wealth has also become much more widely distributed than previously when the majority of houses were owned by private landlords, and house price inflation has meant that many owners have experienced considerable capital appreciation from their houses. Housing has become a source as well as a store of wealth. Whitehead (1979) has noted: 'buying and living in one's own home has proved to be one of the most profitable investments, at least since 1945', and Ray Pahl (1975: 291) perceptively commented of the early 1970s house price boom: 'Many households have gained more from the