Vanessa Hale
Director, Research
One in 79 Britons is now a millionaire thanks to the long-term rise in property prices. We take a look at the forces shaping the new property prosperity.
The number of millionaires in the UK has risen from one in 84 in 2016 to one in 79 – a total of 625,000 people – according to a new report by Barclays Wealth and Investment. Every region in the UK, bar Scotland, has more millionaires than it did 12 months ago, but the UK-wide Prosperity Map report, which looks at wealth indicators including GDP per capita and unemployment rate, as well as average house prices, shows the prosperity picture isn't an even one. Cities are growing faster than regions and the greater South East is continuing to outperform the rest of the country economically.
Concentration in the capital
Unsurprisingly, the majority of the millionaires – 285,000 – are to be found in London and the South East, and will include property boom beneficiaries who got on the ladder early on in life when homes were cheaper.
However, although the most expensive homes are still in London (an average of £502,787), property prices are now rising faster in almost every city other than the capital, where prices are up 3%. Birmingham (8%) and Manchester (7%) have seen the biggest increases, according to Barclays research.
This trend looks set to continue. Earlier this year, mortgage broker Private Finance predicted that while London currently has 53% of all homes worth £1m-plus, this balance is likely to shift in coming years.
Meanwhile, London saw the third lowest growth in number of millionaires compared with other regions. It also saw a 0.3% year-on-year fall in its share of millionaires, due to significant rises in other regions. In particular, the millionaire population grew in the East Midlands (11.1%) and the South West (10.5%) – both areas where house prices have seen strong levels of growth.
Scotland has 30,500 millionaires, while Wales and Northern Ireland each have 12,500. As Barclays says, the term 'millionaire' is no longer reserved for someone with extreme wealth.
Prosperity spreads to other cities
In terms of the overall economic picture, according to Barclays Wealth and Investment’s Prosperity Map, London is still the UK's most prosperous city with the highest GDP, as well as the highest household expenditure at £652 per week. However, London's GDP per capita grew by only 1.6%, while Newcastle and Birmingham saw the biggest year-on-year increases. Birmingham is also booming in terms of start-up businesses, with 1.81 businesses being created for every closure. This beats London at 1.78.
Ongoing effects
"It's encouraging to see that people across the country are benefiting from higher earnings and the momentum created by greater GDP per capita," said Dena Brumpton, Chief Executive, Wealth & Investments, Barclays.
"The continued economic growth of the UK's cities is further cause for optimism – but if the current trend of high prosperity growth in cities continues, regions risk being left behind by their flourishing centres. The challenge for businesses and policymakers is to find new ways of bridging this gap and ensuring greater balance in how each part of the UK is sharing in the country's prosperity."