Rising house prices are building up the average homeowner’s wealth more quickly than strong share gains, according to new analysis by HUB Financial Solutions.

The advisory firm suggested the trend reinforces why property wealth must be considered alongside other assets when developing long-term financial plans.

The latest house price data from the Office for National Statistics (ONS) for the year to May 2021 shows the average UK home was worth £254,624 – having increased by £23,116, or 10%, over 12 months.

This compares to an average stocks and shares ISA holding of £64,4732, according to recent HMRC data, which would have returned around £11,528 based on a FTSE 100 tracker gain of nearly 17.9% between June 2020 and June 2021.

The latest HMRC stats also showed that the average cash ISA is worth £12,4422, which at a nominal growth of 1% given rock bottom interest rates, has increased in value at just £124 over the year.

HUB Financial Solutions managing director, Simon Gray, said that the analysis demonstrates that overall wealth depends not just on rising prices but on the size of the original stake.

“For many people, their home is the most valuable asset, outstripping pension savings or other investments in products like ISAs,” Gray said.

“This means that even though the average property price has grown far less in percentage terms than a FTSE 100 tracker over the past year, the average property has seen an actual return in pounds and pence of twice that of the average stocks and shares ISA.

“It is a reminder of the importance of factoring in housing wealth when people are drawing up their plans for retirement. Those homeowners who are ‘income poor, asset rich’ will need to top-up their state and private pension income from other sources while those with sufficient income will still have to think about how to deal with inheritance tax and potential care costs.”

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