Household wealth hits five-year low

The wealth of the average British household hit a five-year low in 2008 because of the fall in house prices, new figures have shown.

It has been revealed that the typical household saw its net wealth fall to £109,000 in 2008, the lowest level since 2003.

But when property prices began to rise again in 2009, it bounced back to an average of £117,000, the Office for National Statistics has said.

The majority of household wealth is held in property, with substantial amounts also invested in life assurance and pension funds. The third largest amount is held in savings accounts.

Despite the blip in 2008, household wealth has more than doubled in real terms since 1997, when it stood at around £56,000.

Consumers appear to have been spurred into better savings habits by the housing market correction and the economic downturn. The average amount set aside soared to 7% of household income in 2009, after hitting a near 40-year low of just 2% in 2008.

And household debt levels also fell slightly, from 173% in 2007 to 161% in 2009.

But this decrease reversed only a fraction of the massive rise in debt levels since 1987, when borrowings were the equivalent of 103% of household expenditure.

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