Britain's wealth held in bricks and mortar

The majority of the wealth held by UK residents is tied up in their homes, new figures reveal.

However, while this is a sign of ever-increasing property prices and home ownership, it could prove a problem in years to come as housing wealth is a lot harder to access in times of need than traditional financial assets.

Calculations by Datamonitor show 55 per cent of the wealth of the nation is now held in property, with this set to rise to 60 per cent over the next two years.

And this rise in the amount of money invested in our homes comes as the amount of financial assets held is falling.

In 1996 some 58 per cent of Britons' wealth was held in pensions, life insurance policies, shares and savings, with just 42 per cent of the nation's wealth held in property.

"House prices have risen significantly over the last 20 years and this is one of the reasons why we have seen such a shift in wealth components," said Ali Crossley, director of lifetime mortgages at Prudential, who commissioned the research.

And this trend has picked up pace in the last few years. Since 2001 the value of the non-financial assets held by Britons has leapt 12.8 per cent, while the amount of money held in traditional savings and pensions has risen just 1.3 per cent.

But while ever-more money is wrapped up in properties, this could prove a problem in later life, as accessing the wealth that you have built up over a lifetime to live off in retirement is far harder if this is held in bricks and mortar rather than in a pension fund or savings account.

And this has led to more people considering equity release to top-up their retirement income.

Figures from the Bank of England this week show in the last three months of 2006, Britons withdrew £14.6 billion from their homes - some 29 per cent more than a year earlier.

Equity release comes in two main forms, home reversion plans and lifetime mortgages.