Soaring house prices in the UK mean that one in every 76 Britons aged 21 or over are now millionaires, up from one in 84 last year.
There are currently 625,000 millionaires in Britain, the highest level on record, with the number of people worth £1m having risen by 44,000 (7.6pc) in the past 12 months, according to Barclays Wealth’s UK Prosperity Map.
Dena Brumpton, chief executive of wealth and investments at Barclays, says that a millionaire is defined as an individual worth more than £1 million, net of liabilities, factoring in all investable assets including cash, savings, equities, mutual funds, fixed income, pensions and property.
Dena stated, “The last twelve months have seen fluctuations in the UK economy, and this is reflected in the mixed picture of prosperity growth across the country.
“The continued economic growth of the UK’s cities is cause for optimism – but if the current trend of high prosperity growth in cities continues, regions risk being left behind by their flourishing centres.”
Nearly half (295,000) of the millionaires live in London and the South East, where property prices are higher than the rest of the country.
London continues to dominate as the UK’s most prosperous city, where the average house price is £482,000. However, Newcastle and Birmingham enjoyed the biggest year-on-year increases in GDP per capita – at 4.4pc and 4.2pc, respectively – growth that is well in excess of the overall UK figure (1.8pc) over the same period.
When it comes to house prices, almost every city has experienced higher house price growth than London (up 3pc), with Birmingham (8pc) and Manchester (7pc) enjoying the biggest increases.
Savills estate agent recently revealed that the number of UK homes worth at least £1 million has doubled in the past decade to almost 400,000.
Frances Clacy, research analyst at Savills, commented on the latest news: “Over the past 10 years, the number of British homes worth in excess of £1 million has more than doubled, despite a small fall of 3.4% in 2016.”
“A large proportion of household wealth can be attributed to equity from housing, so the strong levels of house price growth seen in the capital over the past ten years will have undoubtedly made a significant contribution to the rise in the number of millionaires.”
DMZ thinks that buying property in undervalued London areas will always see value in the long term.
New London property millionaires may not be very liquid – with the looming spectre of higher interest rates we think now is the time for property millionaires to consider releasing equity at rock bottom fixed rates and reinvesting the capital in other higher yielding assets. Taking part in this type of arbitrage is considered high risk by some, but even if you fixed at 2% and invested in a relatively safe asset for 3-4% over a period of two years the compounding effect would be sizeable.