A new study by the Office for National Statistics (ONS) has revealed that 20% of middle aged workers are property millionaires – on paper!
In the South East of England almost 30% of people in their 40s and 50s living in private residential properties can calculate their wealth to seven figures, when including savings, investments, the value of their homes and pension pots.
However, the study also revealed a sharp divide between North and South of England as well as between generations.
It claims that five times more children are growing up in households in the bottom top wealth bracket, North East, South East, wealth category as there are in the top wealth bracket.
While almost 60% of middle aged people in the South East have built up an impressive half a million pounds in savings, pension and property wealth, in the North East, 20% of the same age group have little or no assets that they can rely on.
The ONS study shows how wealth builds up through people’s working lives but begins to fall once they retire and begin using up their accumulated assets, in many cases on elderly care.
This year’s ONS study compounds their 2012 findings showing that the South of England has 50% more millionaire households than the rest of the UK put together.
But the new study compares the levels of wealth of individual households across the UK and across generations for the first time.
The results are drawn from the ONS’s Wealth and Assets survey, which attempted to measure the assets and debts of more than 46,000 people over a two-year period from 2008 to 2010.
The survey, the largest of its kind, involved asking residential property owners the value of their home, as well as any holiday or buy-to-let properties, and subtracting the amount still outstanding on mortgages as well as estimating their pension pot.
It had previously been estimated that around 10% of the population live in millionaire households but the new analysis shows among some groups the figures is almost three times that.
It shows that 6% of children under 15 and around 11% of older teenagers and young adults in the UK are growing up in families with total assets in excess of £1 million (GBP).
Among those in their late 20s and 30s, the proportion drops again to 5% as most have already begun to set up their own homes
But among those aged 45 to 64, who have established careers and benefited from years of rising property prices before the financial crisis hit, 19% have amassed more than £1 million (GBP) in household wealth.
In London the figure is 22% and in the rest of the South East it reaches 28%, almost twice that in the North East.
Meanwhile 10% of pensioners can count their assets in seven figures while a third of over 65s have more than £500,000 (GBP) in property wealth, investments and savings.
But in the North East, only 25% of pensioners have less than £50,000 (GBP) in savings and property assets and very few investments.
Ed Cox, director of IPPR North, said “The figures showed a nation seemingly increasingly divided along lines of wealth and warned of the dangers of the property market in the south overheating. We have always been a divided nation, this is something which is quite literally decades if not centuries old. But what concerns us most about these figures is the suggestion that that gap is actually widening and largely as a result of the property market.”
The ONS said the pattern reflected booming residential property prices in some parts of the country as well as pension savings but also showed how people’s assets begin to dwindle after retirement.
An ONS spokesman explained: “Not all adults stop working aged 65, but in general in this age group the majority of individuals are no longer active in the labour market. For some within this age group, wealth is slowly reduced over time as they begin to draw down their pension wealth. However, it is also possible for household wealth to increase within this age group, for example due to rising property wealth or rising financial wealth from investments.”
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