More families are starting to splash out on luxury items such as holidays, leisure goods and satellite television subscriptions, while growing numbers are putting away money for a rainy day.
However, this rise in income and fall in expenditure disguises a growing wealth gap, while fears about rising inflation are being replaced with worries about interest rate increases.
Aviva’s data shows that the average family home is worth £230,030, the largest figure ever recorded by the Family Finances Report series and a substantial increase of £7,213 or 3% since December 2013.
There are clear regional splits within this data however. Families in Yorkshire and the North East and West have seen their homes fall in value by up to 7% since December 2013.
The average family house price in Yorkshire is now £197,004, down from over £201,000, while in the North West it is £170,719 down from more than £183,000. Meanwhile the average London family home has increased in value from £359,331 to £372,931, an increase of nearly 4%.
Household debt is now lower than it has been at any point since November 2011. This debt has frequently exceeded £10,000 over the last three years, and was as high as £12,834 in May 2013. It is now at less than half that maximum level, at £6,354, down £342 in the last six months alone.
The last six months has also seen a reduction in the number of families who are worried about the rising cost of living.
As inflation has fallen during this period, 5% fewer families cited this as a worry, although 2% more are worried about the spectre of rising interest rates instead.
Families are also worried about the loss of income from their investments, and the possibility of serious illness for family members.
Louise Colley, protection director for Aviva, said: “Britain’s families seem to be recovering well from the financial crisis, saving more and even feeling confident enough to spend a little on luxuries.
“However, fears about the future, including rising interest rates, as well as increased use of bank overdrafts, indicate that for many people finances are still finely balanced.
“These latest figures show how quickly financial situations can change so we’d urge people to take steps to protect themselves against unexpected financial shocks.
“While some families do appear to be on a firmer footing, an unexpectedly lost income can have huge repercussions, so it’s important that people make sure they protect their loved ones’ futures.”
