Wealth and Assets in Scotland, 2006–2014
Analysis of the ownership of wealth by private households in Scotland from the Wealth and Assets 2006–2014 survey.
9 Movement of Households Across Deciles and Wealth Bands
This chapter considers the extent to which households moved between wealth deciles and wealth bands [33] over time. In order to capture these movements, this analysis is restricted to the longitudinal sample only, i.e. only those households that were interviewed at the previous survey periods are included.
9.1 Movement across wealth deciles
The build-up of wealth accumulation is a cumulative process - generally, as households move through life stages, they are able to increase the value of their wealth. However, for some households, a lack of resources means an inability to accumulate any wealth. Those in the lowest wealth deciles are the least likely to be able to build wealth - in terms of savings, property and pensions - which can be drawn upon in older age to maintain a good living standard in retirement. The capacity to build wealth, and move into a higher wealth band, really only starts to occur for households in the fourth decile and higher.
In 2012/14, 46% of Scottish households remained in the same total wealth decile as they were in 2010/12. In the same period, 26% of households moved up and 28% moved down. Chart 9.1 shows the proportion of households which moved down, stayed in the same total wealth decile or moved up between different survey periods.
The slowing of movement between deciles, from 2008/10 to 2010/12, appears to have continued into 2012/14. Between 2006/08 and 2008/10, 38% of households remained in the same wealth decile, while 34% moved to a higher decile, and 28% moved to a lower decile. The number of households moving deciles decreased in 2010/12, with just under half (49%) of households remaining in the same wealth decile between 2008/10 and 2010/12. In the latest period, around half of households (46%) remained in the same decile, with fewer households increasing their wealth enough to move into a higher decile.
Chart 9.1 Movement across household wealth deciles, Scotland 2006/08 - 2012/14
Source: Wealth and Assets Survey, ONS
Nearly 60% of households with the lowest wealth, remained in the lowest wealth decile in 2012/14. This reflects that households with very few resources do not have the capacity to build up wealth. Indeed, this group are likely to have negative financial wealth (loans and liabilities greater than the value of any assets owned), to rent rather than own a property, and not contribute to a pension. A similar picture is seen for the second decile - where half remained in the same wealth decile across the two periods.
At the other extreme, households in the top wealth deciles are likely to remain there over time - with two thirds of the wealthiest households remaining so over the two periods. However, the proportion of the wealthiest households remaining in the top decile decreased in 2012/14. Across the previous periods around three quarters of the wealthiest households remained in the top decile. In 2012/14, this decreased to two thirds.
Where households do move up into higher wealth deciles, the majority of moves were into the adjacent decile. This reflects the cumulative nature of wealth accumulation for many households, as mortgages are paid off, additional years of pension contributions are made, and earnings increases with career progression.
Table 9.1 provides details of the deciles households moved from and to between 2010/12 and 2012/14. The rows show the decile the household was in in 2010/12, while the columns show the decile the household was in in 2012/14. Cells show the percentage of households from a given 2010/12 decile by what decile they are in in 2012/14. The diagonal values (dark blue) present the proportion of households that remained in the same wealth decile across the two survey periods. The additional (highlighted) cells show those deciles that saw a substantial proportion of households moving into them.
For example, looking at the second row of table 9.1, the diagonal cell shows that 50% of households, who were in the 2 nd decile in 2010/12 were also in the 2 nd decile in 2012/14. The cell on the left shows that 22% of households had dropped down from the 2 nd to the 1 st decile between 2010/12 and 2012/14; while the cell on the right gives the proportion of households that moved up to the 3 rd decile over the same period (18%).
Considering the percentages on the diagonal, the most movement occurred amongst households who were in the middle of the wealth distribution in 2010/12 - between the 5 th and the 8 th decile. Moreover, from these households, those who were placed in the 5 th, 7 th and 8 th decile, more moved down than up. Households placed in the lowest and the highest decile were most likely to remain in the same position. The majority of moves were into the relevant adjacent decile. This may reflect that wealth accumulation occurs cumulatively, rather than in big changes.
Table 9.1 Movement of households across total wealth deciles, Scotland 2010/12 - 2012/14
| DECILE | 2012/14 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1st | 2nd | 3rd | 4th | 5th | 6th | 7th | 8th | 9th | 10th | ||
| 2010/12 | 1st | 58% | 25% | 9% | 6% | 1% | 0% | 0% | 2% | 0% | 0% |
| 2nd | 22% | 50% | 18% | 3% | 0% | 4% | 0% | 2% | 2% | 0% | |
| 3rd | 3% | 20% | 48% | 18% | 5% | 2% | 3% | 1% | 0% | 0% | |
| 4th | 3% | 4% | 11% | 43% | 25% | 11% | 4% | 0% | 0% | 0% | |
| 5th | 1% | 0% | 6% | 28% | 38% | 19% | 4% | 4% | 0% | 0% | |
| 6th | 0% | 0% | 2% | 2% | 25% | 36% | 24% | 6% | 5% | 0% | |
| 7th | 0% | 2% | 0% | 1% | 9% | 22% | 35% | 24% | 6% | 1% | |
| 8th | 1% | 1% | 0% | 3% | 4% | 8% | 23% | 35% | 19% | 5% | |
| 9th | 0% | 0% | 0% | 0% | 1% | 1% | 8% | 27% | 51% | 12% | |
| 10th | 1% | 1% | 0% | 3% | 1% | 1% | 1% | 5% | 20% | 67% | |
Source: Wealth and Assets Survey, ONS
9.2 Movement across household wealth bands
This section looks at households' movements across wealth bands. Wealth bands are more appropriate for illustrating movement over time where there are large numbers of households with the same value of wealth. This analysis is presented for financial, property and physical wealth only as these wealth types can increase or decrease in value more dynamically than pension wealth. Private pension wealth accumulates more consistently across a person's working life, and decreases in value on retirement when income is drawn down.
9.2.1 Financial wealth
For the analysis of financial wealth the wealth bands used are:
| Financial wealth bands: | |
|---|---|
| 1st | lower than -£5,000 |
| 2nd | -£5,000 to -£500 |
| 3rd | -£499 to -£1 |
| 4th | £0 to £499 |
| 5th | £500 to £4,999 |
| 6th | £5000 to £12,499 |
| 7th | £12,500 to £24,999 |
| 8th | £25,000 to £49,999 |
| 9th | £50,000 to £99,999 |
| 10th | £100,000 and more |
Note that the range of wealth bands is quite narrow, especially for the lowest financial wealth bands. Households near the bottom of the distribution (those with the least financial wealth) have negative financial wealth - non-mortgage debts greater than the value of financial assets. It is not until the 4 th financial wealth band that households start to have net financial wealth in the form of savings or money in the bank. Only a small percentage of households have high levels of financial wealth in Scotland.
There was a considerable movement between financial wealth bands across all survey periods. Chart 9.2 shows that 35% of Scottish households stayed in the same financial wealth band in 2012/14 as they had been in 2010/12. Of those that changed their financial wealth band, more households moved into a higher wealth band than to a lower one - 35% of households moved to a higher financial wealth band and 29% to a lower wealth band. In contrast, between 2008/10 and 2010/12, 31% of households remained in the same financial wealth band while 32% moved up and 37% moved down.
Chart 9.2 Movement across household financial wealth bands, Scotland 2006/08 - 2012/14
Source: Wealth and Assets Survey, ONS
Table 9.2 below provides details of the financial wealth bands that households moved to and from between 2010/12 and 2012/14.
- The most significant movement was observable for households placed in the 2 nd (-£5,000 to -£500) and 3 rd (-£499 to -£1) wealth bands. In these groups, more than half of households (combined) moved up, either decreasing their net negative financial wealth or moving into positive financial wealth.
- A high level of movement was also observable for households placed in 7 th (£12,500 to £24,999) and 9 th (£50,000 to £99,999) financial wealth bands, but in these groups, more households moved down than up.
- Households placed in the lowest (lower than - £5,000) and the highest wealth bands (£100,000 and more) were the most likely to remain in the same position.
- However, from the households placed in the lowest financial wealth band ( i.e. with the most significant debt), 60% (combined) managed to move up between 2010/12 and 2012/14. From households placed in the highest wealth band, 56% remained in the same financial position in 2012/14 as they had been in 2010/12.
Table 9.2 Movement of households across household financial wealth bands, Scotland 2010/12 - 2012/14
| WEALTH BAND |
2012/14 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1st | 2nd | 3rd | 4th | 5th | 6th | 7th | 8th | 9th | 10th | ||
| 2010/12 | 1st | 40% | 20% | 2% | 3% | 12% | 8% | 5% | 1% | 3% | 6% |
| 2nd | 20% | 24% | 6% | 18% | 18% | 5% | 5% | 1% | 0% | 2% | |
| 3rd | 0% | 29% | 14% | 26% | 25% | 5% | 1% | 0% | 0% | 0% | |
| 4th | 5% | 10% | 9% | 39% | 28% | 4% | 2% | 0% | 0% | 4% | |
| 5th | 6% | 7% | 2% | 12% | 38% | 17% | 7% | 3% | 4% | 3% | |
| 6th | 3% | 2% | 1% | 3% | 24% | 36% | 15% | 7% | 6% | 2% | |
| 7th | 2% | 2% | 0% | 4% | 12% | 20% | 28% | 19% | 12% | 2% | |
| 8th | 2% | 0% | 0% | 0% | 9% | 9% | 10% | 33% | 22% | 14% | |
| 9th | 4% | 0% | 0% | 0% | 8% | 6% | 14% | 16% | 28% | 24% | |
| 10th | 2% | 4% | 0% | 0% | 7% | 3% | 3% | 9% | 16% | 56% | |
Source: Wealth and Assets Survey, ONS
9.2.2 Property wealth
For the analysis of property wealth the wealth bands used are:
| Property wealth bands: | |
|---|---|
| 1st | £0 or less |
| 2nd | £1 to £49,999 |
| 3rd | £50,000 to £124,999 |
| 4th | £125,000 to £249,999 |
| 5th | £250,000 to £374,999 |
| 6th | £375,000 to £499,999 |
| 7th | £500,000 and more |
There is less movement across property wealth bands than for other forms of wealth. This is because the main residence is usually the only property owned for the majority of households. As mortgages are paid off, net property wealth increases through time, until properties are owned outright. However, property wealth will also increase if housing prices are increasing. Many who purchased property in the 1970s and earlier have benefitted from the large increases in house prices over the last 40 years.
Chart 9.3 shows the proportion of households which moved down, stayed in the same property wealth band or moved up between different survey periods.
- Between 2010/12 and 2012/14, almost 83% of Scottish households did not change their property wealth band, 7% moved down, and 10% moved up.
- This pattern was similar to previous years. Between 2008/10 and 2010/12, more than 80% of Scottish households also stayed in the same property wealth band while 7% moved down and 12% moved up.
Chart 9.3 Movement across household property wealth bands, Scotland 2006/08 - 2012/14
Source: Wealth and Assets Survey, ONS
Households in the lowest property wealth band (owning no property, or with mortgages greater than the value of the property) were the least likely to move property bands over the period, with nearly all (93%) remaining in the lowest property band. Many of these households have lower income, and are not in a position to purchase a property.
Across the UK, housing affordability has been steadily declining since 2000, and this was particularly the case for younger adults (aged between 22 and 29 years). Over the last 16 years, the median house price in the UK has risen from 6 times a younger worker's average income, to over 10 times. This is linked to both lower earnings for younger workers (particularly since the recession) and lower supply leading to growth in house prices [34] .
Younger households whose properties are heavily mortgaged are also included in this group. It will also include those who prefer to rent their property - again, this applies particularly to younger households who may be moving for education and employment. However, there remains a group of households who experience difficulties in entering the housing market, either due to low income, high house prices, or both.
Table 9.3 shows the percentage of households moving property wealth bands between 2010/12 and 2012/14. The highest movement was observable for households placed in the 6 th property wealth band (£375,000 to £499,999) where 67% remained in the same position, 29% (combined) moved down and only 4% moved up. The second highest movement was observable for households placed in the 2 nd (£1 to £49,999) and 5 th (£250,000 to £374,999) property wealth band. In the 2 nd group, 25% of households moved up and 5% moved down whereas in the 5 th, 15% moved up and 15% moved down. The vast majority of all recorded movements were into bands adjacent to the original one.
Table 9.3 Movement of households across household property wealth bands, Scotland 2010/12 - 2012/14
| WEALTH BAND |
2012/14 | |||||||
|---|---|---|---|---|---|---|---|---|
| 1 st | 2nd | 3rd | 4th | 5th | 6th | 7th | ||
| 2010/12 | 1st | 93% | 5% | 2% | 1% | 0% | 0% | 0% |
| 2nd | 5% | 70% | 23% | 2% | 0% | 0% | 0% | |
| 3rd | 2% | 7% | 81% | 9% | 0% | 0% | 0% | |
| 4th | 2% | 1% | 8% | 81% | 7% | 0% | 1% | |
| 5th | 3% | 2% | 0% | 10% | 70% | 13% | 1% | |
| 6th | 8% | 0% | 0% | 8% | 13% | 67% | 4% | |
| 7th | 2% | 9% | 0% | 0% | 0% | 13% | 76% | |
Source: Wealth and Assets Survey, ONS
9.2.3 Physical wealth
For the analysis of physical wealth the wealth bands used are:
| Physical wealth bands: | |
|---|---|
| 1st | less than £8,000 |
| 2nd | £8,000 to £11,999 |
| 3rd | £12,000 to £15,999 |
| 4th | £16,000 to £24,999 |
| 5th | £25,000 to £29,999 |
| 6th | £30,000 to £39,999 |
| 7th | £40,000 to £49,999 |
| 8th | £50,000 to £59,999 |
| 9th | £60,000 to £74,999 |
| 10th | £75,000 and more |
There has been a small decrease in the level of movement between physical wealth bands between 2010/12 and 2012/14 compared with the previous period.
Chart 9.4 shows the percentage of the sample moving up, staying in the same physical wealth band and moving down across all survey periods. While almost 50% of Scottish households remained in the same physical wealth band, 23% moved down and 28% moved up. However, between 2008/10 and 2010/12, 46% of households were in the same position, 18% moved down, but 36% moved up.
Chart 9.4 Movement across household gross physical wealth bands, Scotland 2006/08 - 2012/14
Source: Wealth and Assets Survey, ONS
Table 9.4 shows the percentage of households moving physical wealth bands between 2010/12 and 2012/14. This shows a more complex picture of movements between bands. Movement rates varied greatly between bands, with the highest percentage of movers in the 2 nd (£8,000 to £11,999) and 8 th (£50,000 to £59,999) physical wealth band. In the 2 nd group, 19% of households moved down, but 52% moved up. In the 8 th wealth band, 31% moved up but 46% moved down. Households placed in the first (less than £8,000) and the last wealth band (£75,000 and more) were more likely to remain in the same situation. There was also a lot of movement into bands not adjacent to the relevant original ones, particularly in an upwards direction.
Table 9.4 Movement of households across household physical wealth bands, Scotland 2010/12 - 2012/14
| WEALTH BAND |
2012/14 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1st | 2nd | 3rd | 4th | 5th | 6th | 7th | 8th | 9th | 10th | ||
| 2010/12 | 1st | 79% | 4% | 10% | 3% | 0% | 1% | 2% | 0% | 0% | 0% |
| 2nd | 19% | 30% | 7% | 24% | 5% | 10% | 2% | 0% | 3% | 0% | |
| 3rd | 12% | 3% | 56% | 14% | 4% | 4% | 2% | 0% | 4% | 0% | |
| 4th | 2% | 8% | 11% | 45% | 9% | 16% | 3% | 3% | 2% | 2% | |
| 5th | 2% | 1% | 3% | 8% | 53% | 17% | 5% | 3% | 6% | 1% | |
| 6th | 0% | 1% | 3% | 7% | 12% | 42% | 17% | 8% | 6% | 5% | |
| 7th | 2% | 0% | 1% | 2% | 8% | 20% | 38% | 13% | 9% | 7% | |
| 8th | 0% | 2% | 0% | 4% | 4% | 2% | 35% | 24% | 18% | 12% | |
| 9th | 1% | 0% | 0% | 1% | 2% | 7% | 9% | 7% | 41% | 31% | |
| 10th | 1% | 1% | 0% | 0% | 0% | 2% | 4% | 3% | 18% | 70% | |
Source: Wealth and Assets Survey, ONS
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