Wealth growth outstrips salaries by three times, finds Handelsbanken

New analysis by Handelsbanken Wealth & Asset Management has revealed that the growth in wealth from assets such as property and investments has outpaced growth in salaries by three times over the past decade.

On investigation of government data on Britons’ wealth, assets and earnings, Handelsbanken economists found Brits are being out-earned by their homes and other investments. Average wealth was found to have risen 59% in the past decade, despite a growth in salaries over the same period of just 19%.

Average wealth for Britons is estimated at £575,948 after growing from £361,831 over the past decade, with house price rises, increases in pensions, investments and physical wealth including possessions all appreciating in value since 2010. By contrast, average earnings only increased to £31,840 during the same period.

Wealth growth for the top 25% of the population has proved even more impressive: they now own wealth estimated at £733,800 compared with £447,900 a decade ago. This group has seen their individual wealth increase 34% faster than the British average, while their salaries have increased 22% faster.

PK Patel, Head of Wealth Management at Handelsbanken Wealth & Asset Management, said:

“Earnings growth has on average been constrained over the past 10 years, with most people relying on their houses, investments, and possessions to boost their wealth.

“It is fascinating to see the gulf between the increase in asset values and the increase in average earnings over the past decade, and is instructive for advisers and their clients on how to plan their finances and assess their wealth.

“No matter how your total wealth is made up, it’s important to have a clear plan on how you want to use it for your own future and for the benefit of other family members.”

A regional divide was also uncovered by the Swedish bank’s analysis. London’s wealthiest saw their assets grow in value by 77% to an average £902,400 in 2020, while the North-east’s top quartile only averaged a 30% growth in their assets. The North-west’s wealthiest were the second worst performers, with a 45% increase in average wealth, although salary increases were in line with the national average.

Handelsbanken Wealth & Asset Management analysed Government data from the Office for National Statistics’ Wealth and Assets Survey and Annual Survey of Hours and Earnings datasets for their research, comparing 2010 and 2020 data.