Tuesday, Jul 24, 2007
Houses 'account for 60pc of the UK's wealth'
Telegraph: Houses 'account for 60pc of the UK's wealth'
Houses now make up three fifths of Britain's wealth, the highest proportion recorded, according to the latest official figures, demonstrating our increasing reliance on the value of our properties. Who needs manufacturing anyway!
Posted by surfgatinho @ 03:59 PM (217 views) Add Comment
18 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. tyrellcorporation said...
This figure goes along way to explaining why they cut rates back in August 2005 - HIGH HOUSE PRICES ARE THE NEW GOD!
Make them angry at your peril!
2. sovietuk said...
In other words 60% of the UK's wealth is a complete work of fiction which in reality means the nation is poor.
3. dohousescrashinthewoods said...
Yep, if prices undershoot the long-run average as the tend to in each crash, we could see a 50% crash, vapourising 30% of this "wealth".
Boom-crash-bing-bang-Gordon
4. mrmickey said...
Will we all end up one day sat in our nice £1,000,000 2 bed terrace feeling smug about being a millionaire but not being able to afford to heat the place or feed our starving kids just like Zimbabwe.
5. Theonlywayisup said...
House prices will rise forever.. thats just the way things work now!! Im sorry all you guys are renting and feel so bitter but its just tough!!!
6. Whiteknight said...
This will merely explain why the currency will collapse shortly.
Nobody in another productive country will give a damn about our housing "wealth" and then the currency will be revalued. In a hurry.
7. robh said...
This is the most striking post I've ever seen to this site
Can one of the financial boffins explain! Does this mean that of the capital of the country that all the steel works and trains and cheese facilities and gold and oil are valued at 40% and the other 60% is monopoly house money?
Its astounding
Do the assets of the banks, like the houses that aren't paid for yet, come under the 60% or the 40% or neither or are they all owned internationally now?
Thanks chaps
8. harold said...
Wow, so much fictitious wealth. Now if someone said that 60% of our wealth was in gold I'd be happy, but a property bubble means that our 'wealth' will be wiped away over the next 2-3 years.
9. Pete Balchin, Solicitor said...
Nice to know it isn't manufacturing!
10. Surfgatinho said...
The problem with all this 'wealth' is it means absolutely jack **** in the rest of the World. In fact it is worse than that. This ficticious wealth is being used to buy more and more imported goods and sink us into serious debt.
It is suprising the rest of the World still thinks Sterling is worth the paper it's printed on with figures like this
11. European-bear said...
It is only a nominal value. If all the property were sold NOW and there were willing buyers to buy the property, that is how you arrive at this fugure. The reality is that if every house was put on the market now, the value of each house woud shrink to zero. Indeed just a few extra per cent increasde in supply (a tiny fraction of the housing stock) would quickly send this % into a nosedive...its crap. House prices are opnion, so this is opinion, debt on the other hand is real.....
12. wiltshire said...
So, 60% of British wealth isn't worth the paper it's not printed on!!!
13. Crash Bandicoot said...
Theonlywayisup
OK I'll bite; where exactly will the money come from to sustain ever-rising prices? With the average salary at £23k and the average house price at £160-220k depending on who you believe are you suggesting that everyone will have 8x mortgages? Those days are gone my friend, if you are reliant on rising house prices to cover your investment you would be well served to cash your chips in and sell up now. It does not matter what you post on here just be honest with yourself.
14. Northernlad said...
...and welcome to Fantasy Island!!!
15. enuii said...
It gets worse because if 60% of the country's wealth is tied up in property and most of it is mortgaged then we as a nation have just spent over 50% of our wealth on Chinese Crap, Cars and Holidays using money we haven't earned and never even had. So it looks like our children will be growing up in a banana republic without bananas as we sink to the lowest common european denominator. The only good thing is that all the immigrants will probably go home or sod off somewhere else when cold reality sinks in and we are all broke.
16. Van Hoogstraten said...
Haha - if we all lived in tents rather than houses would they still be worth the same amount
17. planning4acrash said...
The ratio of house prices to capital must have something to do with the yield from capital in combination with the cost of borrowing. It is easy to explain that house prices should rise relative to capital given that much of the UK PLC's profits have come from outside the country in recent years via ownership of foreign companies and from domestic companies operating overseas and from foriegn money using the UK city to invest its money, something like 10% of all the world's deposits are held in Sterling now. The UK has embraced globalisation more than most countries. I think that the house price bubble is a classic example of overshoot, accellerated by cheap borrowing, but I do think that house prices being a higher ratio to UK assets could be a structural shift to a degree. Therefore, I take to task the suggestion that we will have a 50% reduction in real terms. This did not even happen in the great depression. I think the correction will be a repeat of 1992, or possibly softer if unemployment stays strong and we don't have a recession. House prices down to somewhere between 130k and 140k within 5yrs with most of the drop happening in the first two. Basically, it will be buy to letters suffering and a few poor fools who bought very recently, and buy to letters would never have invested in productive capital in the first place, so they are little loss to the economy. Clever money has moved on and is having decent safe yields elsewhere already and most who bought, bought one bed flats when fundamentals should result in them buying a houses, at the right point in the cycle. They will suffer a drop in standards of living but many will trudge on and I think that we will avoid a recession, given how far GDP has to fall, and the economy will pick up in time for the Olympics and a general election, with Brown winning. That's what I reckon anyway.
18. dohousescrashinthewoods said...
Interesting, planning4acrash. I would put two cautionary caveats there:
- leverage
- fake money
Anyone who has cashed in to a greater fool is laughing because they have been given real money for fake value. They have ridden the wave of invented money (caused by the boom in leverage) and persuaded someone to pay for what is effectively snake oil. That is to say, there are more "debt obligations" out there than there is "actual value". I.e. the figure above is predominantly fantasy. If all this had to be repaid, it couldn't be done in 100 years.
That is why this is a bubble - thousands of mortgages that can never be repaid because we cannot generate enough money to do so. Either people take massive losses or we have hyperinflation to take the value out of money so that there can be enough money (still with no overall increase in value).
That's probably not the clearest explanation. What I'm trying to say is that there is more debt out there than there is money to satisfy it. The value can never be repaid, so value must disappear from either the assets or the currency (HPC or inflation). I suspect that if you added up all the credit, debt and derivatives in the world, you would find that the books don't balance - by a very long way indeed - which means a corresponding amount of "stuff" will have to disappear (revalued, devalued, defaulted).
I don't believe it can be as benign as you suggest. The seriousness will depend on the degree to which the books don't balance. If it really is gazillions upon gazillions, we really will see a depression.