UK property wealth creates record number of 'Demi-millionaires'
Friday, 27th October
While recent surveys have highlighted the growing number of property millionaires in the UK and Ireland, The Daily Mail has identified a record number of 'demi-millionaires'.
Citing the findings of a report from stockbrokers Brewin Dolphin, it found that more than 820,000 people in Britain have assets worth at least £500,000 – and this number is rising at about 10% a year.
To qualify for membership of this growing club of high net worth individuals, your assets minus your total debts must add up to £500,000 or more. Rising house prices have created this new ‘demi-millionaires club’ because the value of property is worth such an enormous amount compared to the price initially paid and the amount of mortgage debt remaining.
However, while the home is the biggest asset in most cases, other forms of investment have also contributed substantially. For example, tax-free Individual Savings Accounts have performed well over the last few years and the FTSE 100 index closed above 6,000 points for the first time since May last week (up 17% over the last year).
Commenting on its research, Martin Smith, chief executive of Brewin Dolphin Wealth Management, said: “The number of people in the UK with sizeable assets is growing rapidly. There are a number of reasons for this, including rising property prices but also strong stock market performance over the long-term.”
Wealthier women
With women representing more than 40% of those in this new bracket, the survey supports a growing trend highlighted by the Centre for Economics and Business Research (CEBR) in August. Now more financially independent, with their own homes and higher paid jobs, women are a major target for the property industry.
The CEBR claims that there will be a million millionaires in Britain within the next ten years, based on a buoyant share market and rising property prices, with the 376,000 people worth a million in 2006 rising to 690,000 in 2010 (before reaching 1.7 million in 2020). It further predicts that, by 2020, 53% of millionaires will be female. This is also attributed to longer lifespans and new legislation which provides for more generous divorce settlements.
The figures, based on forecasts for economic growth, population and house prices, also include data relating to 'marketable wealth' from HM Revenue & Customs (HMRC). The CEBR predicts a 71% rise in UK house prices between now and 2020. In spite of global concerns over affordability, which has resulted in several recent interest rate rises, the think tank believes that a 10% decline in average mortgage payment as a proportion of average household disposable income will add to individual wealth. Furthermore, property will account for a higher proportion of wealth over the next decade. Data from HMRC indicates that property accounted for only 30% of the net wealth of millionaires in 2003, but the CEBR claims this has already risen to 45%.
Even wealthier Irish
A survey by the Bank of Ireland found that the world's second most affluent nation boasts around 30,000 property millionaires. Average wealth per head in Ireland reached €150,000 by the middle of the year, with a large proportion coming from property.
The report found that Irish wealth had grown by 350% in the past 10 years to €681 billion and that the value of Irish assets would continue to rise to €1.2 trillion by 2015. With personal savings totaling €10 billion at the end of last year, it is likely to rise to €24 billion by 2015.
In this prosperous environment, the report observed that - out of a population of 4 million - there are now 30,000 millionaires. Of these, 300 people had a net worth in excess of €30 million, 2,700 people are worth between €5 million and €50 million, and the rest are worth up to €5 million.
Source: Overseas Property Professional
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