Coronavirus house price boom widens UK wealth gap By Reuters

© Reuters. FILE PHOTO: Construction workers build a new house in Aylesbury, Britain August 6, 2020. REUTERS/Matthew Childs/File Photo

By David Milliken

LONDON (Reuters) – A boom in Britain’s housing market and a surge in global share prices has led to windfall gains for middle-income and richer households during the coronavirus pandemic, research from the Resolution Foundation think tank showed on Monday.

The average British household saw its wealth rise by 7,800 pounds ($10,800) due to asset price rises and, to a lesser extent, lower day-to-day spending, despite Britain suffering its sharpest economic downturn in more than 300 years in 2020.

“Many families have been forced to save rather than spend during lockdowns, while house prices have continued to soar even while working hours have plummeted,” said Jack Leslie, senior economist at the Resolution Foundation

The biggest percentage increase in wealth came for those in the middle of the wealth distribution, whose net assets increased in value by 9% to 80,500 pounds per adult, driven by a sharp rise in house prices.

Aided by a cut in property purchase taxes and greater demand for more spacious houses suited to working from home, British house prices rose by 9.9% in the year to March, the biggest increase since 2007.

The richest 10% households – who hold a greater proportion of their wealth in shares and less in housing than the median household – saw a smaller percentage rise but the biggest absolute gain of 44,000 pounds per adult.

By contrast, the least wealthy 30% of Britons saw an average increase in their wealth of just 86 pounds.

The Resolution Foundation said Britain’s government should look harder at how to tax increases in wealth, rather than place most of the tax burden on earned income and spending.

The findings are also likely to interest the Bank of England, which thinks Britain’s economy might get a modest boost from households spending some of their extra wealth.

However, opinion polling used in the study raised the risk of the opposite. Only 14% of households that had built up savings during the pandemic said they were “very likely” to spend them. By contrast, 35% expected to save more even after the pandemic, often because they had got used to economising.

($1 = 0.7227 pounds)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Most Related Links :
Business News Governmental News Finance News

Need Your Help Today. Your $1 can change life.

[charitable_donation_form campaign_id=57167]

Source link

Back to top button