How Much Is All Of Uk Property Actually Worth?

[Second Time Around]

It is interesting to know how much UK property is currently actually valued at and whether there is actually a tally kept by the ONS. If houses on a road in 2000 were valued at 65K each it is generally believed that in 2010 when a house on the same road is sold at 195k then all the other houses are worth 3x as much and this will count as an increase in national wealth against which home owners can borrow. If the ONS kept such a record would they would account for new houses, extensions and demolitions?

I think a few years ago someone posted a graph to show the value of loans extended by banks on properties which showed the impact of falling house prices on the banks' balance sheets for each %age point fall. I would be grateful if anyone who remember it can provide a link.

I am also dead chuffed I've now reached my 300th post!

[Liquid Goldfish]

Not long before the banking crisis HBOS estimated it was worth £4 trillion

Secured borrowing is about £1.2 trillion

[Second Time Around]

Not long before the banking crisis HBOS estimated it was worth £4 trillion

Secured borrowing is about £1.2 trillion

Thanks oldsport.

[SarahBell]

26M households I think and average price is 165k

(18.3 million households in the UK (70 per cent) had Internet access in 2009.

so 100% households = 26M?)

I'm awful at maths

4290 and 9 zeros...?

[indirectapproach]

Does that make it 4.3 trillion, pounds?

And is that less than 3 times a national GDP of some 2.5 trillion $?

Those numbers seem to have some balance about them.

Maybe that's why no hpc?

Edited June 27, 2010 by indirectapproach

[Realistbear]

IIRC UK Plc was valued at around 8TR a year or so ago.

In 2006 it was as follows:

http://www.independent.co.uk/news/business/news/value-of-uk-plc-breaks-through-1636-trillion-409146.html

Value of UK plc breaks through £6 trillion

By Philip Thornton, Economics Correspondent

Tuesday, 25 July 2006

The total value of the UK broke through the £6,000bn mark for the first time last year thanks to another rise in housing wealth, official figures showed yesterday...../

I

n 1995 housing made up just 43 per cent of total assets

and it broke through the 50 per cent barrier only in 2000, the same year that homes were worth £2 trillion for the first time.

HPI raged on two years after the above data was compiled to where, at the peak, it was worth 45% of the total UK net worth whihc is 8TR X 45% = 3.6 TR pounds.

When you allow these figures to sink in you start to see why the government is fighting tooth and nail to keep HPI on track. A 50% fall would mean that 1.8TR pounds would have to be written off one way or another. We cannot afford a loss of that magnitude as it will take the banks and the whole system down with it.

Now you know why Osborne could not hike CGT to the point where it would slow down BTL and multiple home ownership. Neither can they afford to cut EU migration down as the bubble has to be kept inflated with demand and limited supply.

On the face of it it would seem that HPI is permanent--as Brown promised no more bust.

Notwithstanding the fact that we are addicted to HPI as a nation, outside forces will cause it to collapse as affordability, rentable values and credit supply will eventually work together to bring it in line with the rest of the world where the bubbles have now all burst (barring the Far East but they have begun wobbling).

We may be the last man standing HPI-wise but the market never loses and our hous prices bear no relationship to sustainability.

2004:

http://www.independent.co.uk/news/business/news/value-of-uk-plc-rises-to-163100000-for-each-man-woman-and-child-500266.html

The report adds up a range of assets, including the value of buildings, roads and financial products. Housing continued to be the most valuable asset, worth £3.43 trillion - up 12 per cent on the previous year and making up 59 per cent of the country's total wealth. Within this, some £3.22 trillion belonged to households and non-profit organisations.

Edited June 26, 2010 by Realistbear

[scepticus]

realistbear, perhaps you could define your terms.

What would be the mechanics of the market losing?

I just want to know about the detail of what this event than cannot happen actually is.

[Realistbear]

realistbear, perhaps you could define your terms.

What would be the mechanics of the market losing?

I just want to know about the detail of what this event than cannot happen actually is.

A 50% fall in the average value of homes would take off about 1.8TR of "value" from UK Plc. Not all of the lost value will be represented by debt but a significant amount would have to be written off by the banks as people begin walking away from their homes due to job losses or negative equity.

Such losses will cause a series of chain reactions including credit writedowns, higher bond prices and higher IR as an accelerant to the HPC.

Because housing is now such a massive proportion of our nations' worth it will probably follow what has happened in California which tends to mirror our market with the same cycles or boom and bust patterns. CA is in a dire state as housing was a massive part fo CA's wealth and the market has lost about 40% overall. We have diverged from CA this time (for now at least) due to record low IR in the nick of time and favourable government policies toward HPI. The banksters have also played a part by foregoing repossessions in thousands of cases.

____________________________

Edited June 26, 2010 by Realistbear

[FreeTrader]

Latest National Accounts data from ONS for households (data for 2009 will be published soon):

[fallingbuzzard]

£1.4 trillion, if liquidated

Not long before the banking crisis HBOS estimated it was worth £4 trillion

Secured borrowing is about £1.2 trillion

[indirectapproach]

So despite all the doom and gloom about UK debt levels, we're surprisingly solvent .... ?

[aa3]

My own guestimate was an average house price of £250k * 20 million housing units. For £5 trillion value.

Free Trader posted a great chart though: Latest National Accounts data from ONS for households (data for 2009 will be published soon): £3.7 trillion value for 2008.. so maybe my estimate is high.

I might be over-estimating the average price. I was trying to factor in that the average was a lot higher than the median, because of extremely expensive estates.

[Second Time Around]

Latest National Accounts data from ONS for households (data for 2009 will be published soon):

Thank you Freetrader. The ONS table is very interesting. It shows that £1.7tr has been added to the net worth of households (excluding inflation) in the 8 years since 2000. The increase in value of residential buildings in the same period is £1.7tr. Without the extraordinary growth in house prices the increase in net worth would have been significantly less. In fact if HPI had increased in line with either wages or RPI net household worth (after allowing for inflation) would have fallen during the period.

Most alarmingly household financial net worth for this period was £-270bn before allowing for inflation!

I agree with the point Realistbear makes about the market - ultimately the valuation given to houses will rest on buyer sentiment. While I can see why governments would like HPI to continue I think they know the game is all but up.

I consider that the government is waiting for some external event/crisis emanating from any one or combination of the Eurozone/Sovereign default/Bond Market/Currency/Banking sectors to trigger the changes eg raising interest rates rather than take action themselves at this stage. This will mean that the actions when they come will be seen as a necessary response to a crisis which can't be blamed directly on the government (particularly if taken by the "independent" BoE). If that all seems a bit cynical, twisted and contrived let's not forget that the ConDems are politicians after all.

[scottbeard]

So despite all the doom and gloom about UK debt levels, we're surprisingly solvent .... ?

Imagine a group of 10 people in which 9 people owe £100,000 each and 1 person has £1 million in the bank. They look solvent as a group total, but in reality 90% of them might be about to deafault and end up on the street.

And of course, the wealth total has shares and property valued at their current level. Any bets that in real terms they will remain at that level over the next 3 years...?

[Tired of Waiting]

Latest National Accounts data from ONS for households (data for 2009 will be published soon):

Thank you for that table FT, most interesting indeed!

[woof]

Imagine a group of 10 people in which 9 people owe £100,000 each and 1 person has £1 million in the bank. They look solvent as a group total, but in reality 90% of them might be about to deafault and end up on the street.

And of course, the wealth total has shares and property valued at their current level. Any bets that in real terms they will remain at that level over the next 3 years...?

If you're talking about net worth, extrapolating the most recent valuation for houses that have sold in order to come up with a value for the entire housing stock, surely only covers one half of the equation. The other, more inconvenient half, that is to realise those valuations an equal amount of debt has to be taken out and cancels out any gain in net worth, appears to have been missed out.

[Realistbear]

Lovely chart. Goes to show how much "wealth" is tied up in residential property. We have a hugely imbalanced economy with more money in unproductive assets than any other nation on earth in all probability. The irony is that the massive "wealth" tied up in house has made us poor in terms of living standards which are among the lowest in Europe according to a very recent report posted on here a few days ago. With the highest proportion of earnings going on house debt it is hardly surprising.

My conclusion remains the same--the added "wealth" of our nation is based on HPI. It is not something we have produced or worked for but a gain based on simple inflation. Easy come and easy go has been the hallmark of our economy for decades. HPI is not a stable means of growth and we are destined to repeat the boom and bust cycle until we get off the drug that seems to be what this country does best.