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Sancho Panza

57% Of Uk's Wealth Is Trapped In Homes As Value Of Britain's Housing Stock Quadruples In 20 Years

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This is money 15 /8/13

Inspired by the Chinese thread,I searched for some comparable research on the UK.

Apologies if it's been posted already.

'Britain was worth £7.3trillion last year official figures showed today but over half of the nation's wealth is tied up in its property, which has quadrupled in value the past 20 years.Around 57 per cent of the nation's wealth is wrapped up in homes, the Office for National Statistics found, totalling £4.4trillion at the end of last year - an increase of 4 per cent on a year earlier.

But the figures also highlight the scale of the property boom since the 1990s. The value of property in Britain today is four times what it was in 1992 when the UK's overall property wealth was £1.2trillion.

The figures will make worrying reading for those who fear Government efforts to bolster the property market, such as the year-old Funding for Lending scheme, are creating another housing bubble.

Earlier this week a poll of 29 economists by the news agency Reuters found 20 raise the fear that Britain is sleepwalking into another housing market bubble.

Seven economists believed there was a even chance of the property market overheating, while 11 described the risk as likely and two as very likely.Business Secretary Vince Cable also recently raised his own concerns that the Government's Help to Buy scheme launched in April, which sees the Government providing an equity loan of up to 20 per cent of the value of a property up to £600,000, risked creating a housing bubble.

And some economists have urged the Government to consider scrapping the second stage of the Help to Buy scheme due to launch in January 2014, which could potentially see the Government acting as guarantor for £130billion worth of mortgages held by new homeowners.

'Should the housing market gain substantial momentum over the coming months, the case for dropping the Help to Buy mortgage guarantee scheme... will strengthen,' UK economist Howard Archer of IHS Global Insight said earlier this week..

The UK balance sheet figures come two days after official figures showed average house prices increased by 3.1 per cent in the year since August 2012 equivalent to a little over £10,000, while average property values in London increase by 8.1 per cent.

article-2394559-1B4F8860000005DC-458_634x511.jpg Climbing higher: It may not have felt like it in recent years but the UK's net wealth has been rising steadily since 2009's dip following the financial crisis

The ONS said the UK's net wealth edged up 1 per cent, or about £74billion on 2011, driven by a £225billion increase in the value of non-financial assets which range from houses and cars to cattle and fine art.

Most of the UK's wealth was driven by the value of households and non-profit organisations such as churches, charities and trade unions.

That came in at a net £7.6 trillion, up 6 per cent or £410 billion on a year earlier, including savings and currency deposits which amounted to £1.3trillion. But Britain's public sector debt and tax revenues were among factors that helped depress the overall figure pulling Britain's overall wealth down to £7.3trillion.

But the value of financial assets and liabilities such as shares, deposits, gold bullion and loans fell by £150 billion.

article-2394559-1B4FAF4C000005DC-958_634x348.jpg Bricks and mortar: the figures prove the adage that bricks and mortar are still the best investment in Britain as UK property is on average worth four times as much as it was 20 years ago

Financial assets of £28.4trillion were outweighed by debts of £28.5trillion, the official figures showed.

The UK's total worth has risen fairly consistently over the past 20 years, the ONS said, except for 2008 and 2009 when the financial crisis drove its value lower.

Its estimate of wealth per person was based on a 63.7million population in mid-2012.

The figures include effects of inflation, and are based on the ONS's estimates of what the assets would be worth on the open market. Home values are based on sale price estimates and are not adjusted for mortgage debt.

The UK's overall value more than trebled in the 25 years from 1987 to 2012, but the ONS said the gentle increase last year reflected subdued demand from the crisis-hit eurozone and a tough domestic economy.

More new cars on the road also drove up the value of transport equipment by 11 per cent to £208billion.

The ONS also added the value of personalised number plates - worth £2.3 billion - to the national balance sheet for the first time.

But Britain's ballooning public sector debt and slumping tax revenues depressed the combined value of central and local government. The whole government sector was worth minus £305billion at the end of 2012, worse than minus £271billion a year earlier.

The ONS said central government's total worth slumped 7 per cent on a year earlier to minus £830billion and is now worth almost five times less than it was in 2006.

However, local government saw a 4 per cent increase in value to £526billion.

Companies were worth minus £253billion at the end of 2012, a £220billion decline on a year earlier as liabilities increased more rapidly than assets. The value of financial corporations such as banks slumped by a nearly a third to £221billion.'

Edited by Sancho Panza

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It's only worth what someone pays for it though. If the ability to earn and therefore pay is curtailed, then the government steps in and covers the shortfall. Forever.

Looking at this supposed "wealth" It looks a lot like a paper tiger.

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Earlier this week a poll of 29 economists by the news agency Reuters found 20 raise the fear that Britain is sleepwalking into another housing market bubble.

Britain sleepwalking into a housing bubble....

housingbubble_zpse87e9d34.jpg

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Britain sleepwalking into a housing bubble....

All you need on an identikit estate of 400 houses all bought for £300,000 in 2007,is for a few to go through at £200,000 and a third of the book value is destroyed.The impact on bank balance sheets of that sort of price action would be ......

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Note an increase in real net wealth from 2007 from 6.5 trillion to 7.3 trillion in 2012 and no doubt knocking on the door of 8 trillion as the Markets have been rocket propelled on QE since.

Belies the opinion of this forum that households are bankrupt or indeed the country. We may suck in excess imports but somehow even in 2012 we had excess overseas assets to foreign held assets here, and foreigners will be even more in our debt now as they slave away producing all the tat for Pound World.. The current account deficits as I have mentioned before somehow fails to pick up surpluses gained on a 28 trillion pound investment balances sheet. And yes that is a very precarious place to be and if it went wrong we could be in an Icelandic style mess.

The real story is a public sector that is getting deeper and deeper into debt.

Meanwhile while certain individuals can command huge assets they will help themselves to numerous houses, Tony Blair style. One reason the housing market can continue upwards as it becomes unaffordable at the entry level.

A divided nation caused by a huge disparity in inter generational wealth.

Edited by crashmonitor

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Note an increase in real net wealth from 2007 from 6.5 trillion to 7.3 trillion in 2012 and no doubt knocking on the door of 8 trillion as the Markets have been rocket propelled on QE since.

Belies the opinion of this forum that households are bankrupt or indeed the country. We may suck in excess imports but somehow even in 2012 we had excess overseas assets to foreign held assets here, and foreigners will be even more in our debt now as they slave away producing all the tat for Pound World.. The current account deficits as I have mentioned before somehow fails to pick up surpluses gained on a 28 trillion pound investment balances sheet. And yes that is a very precarious place to be and if it went wrong we could be in an Icelandic style mess.

The real story is a public sector that is getting deeper and deeper into debt.

Meanwhile while certain individuals can command huge assets they will help themselves to numerous houses, Tony Blair style. One reason the housing market can continue upwards as it becomes unaffordable at the entry level.

A divided nation caused by a huge disparity in inter generational wealth.

So imaginary housing wealth means that the country is not bankrupt :lol: If that is what you mean please pull the other one.

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The ONS also added the value of personalised number plates - worth £2.3 billion - to the national balance sheet for the first time.

I was getting worried 'til I read that.

Can't be long before Osborne launches a help to buy a personalised number plate scheme.

Edited by R K

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I was getting worried 'til I read that.

Isn't the problem with personalised number plates that they are only valuable to you the individual?

I really hope the ONS includes my personal domain name portfolio in the calculations. Its worth billions, honest!

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So imaginary housing wealth means that the country is not bankrupt :lol: If that is what you mean please pull the other one.

43% of 7.3 trillion is a hell of a lot of net assets not tied up in housing. Never considered a house an asset myself, as a homeowner I think they are bloody liabilities. But many boomers think otherwise and are distorting the demand for houses with their massive funds and their ability to buy several if they so choose..........

http://blogs.telegraph.co.uk/finance/ianmcowie/100013939/baby-boomers-with-80pc-of-uk-wealth-shouldn%E2%80%99t-feel-guilty-about-younger-generations-problems/

Edited by crashmonitor

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The one thing that is deteriorating is public sector debt. But fear not it is all internally financed by gilts and NS and I.

http://www.economicshelp.org/blog/334/uk-economy/uk-national-debt/

Nice to know that some of us got to create the debt, we now own the debt, and then the young have to come up and service it.

Edited by crashmonitor

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I was getting worried 'til I read that.

Can't be long before Osborne launches a help to buy a personalised number plate scheme.

Can't Osborne just buy a bogey off himself for a couple of trillion or something? That'll really sort it.

I'm somehow reminded of that weird worthless diamond story from a couple of years back...

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Can't Osborne just buy a bogey off himself for a couple of trillion or something? That'll really sort it.

I'm somehow reminded of that weird worthless diamond story from a couple of years back...

At the end of the day it is not just housing but all asset markets that seem a little toppy. Trouble is as the world gets wealthier suddenly UK assets in a relatively green and pleasant land with only a sprinkling of corruption might seem a bit more attractive than buying assets in a God forsaken Shanghai slum.

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43% of 7.3 trillion is a hell of a lot of net assets not tied up in housing. Never considered a house an asset myself, as a homeowner I think they are bloody liabilities. But many boomers think otherwise and are distorting the demand for houses with their massive funds and their ability to buy several if they so choose..........

http://blogs.telegra...tions-problems/

Where are the other assets tied up?

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The This is Money article has lots of figures but the overall gross figures aren't tabulated to help in seeing the overall picture. There's no mention of the trillions of off balance sheet stuff as detailed by the taxpayers alliance at least 3 years ago - included in the nearly £8 trillion of national debt then and likely more by now. It might be included in the article's figures but there again it might not be.

If the off balance sheet figures aren't included then the UK's net wealth is more likely nearer zero.

There doesn't seem to be any mention in the article of oil/gas/fracking energy etc either although it seems doubtful those figures would have been omitted from the ONS analysis.

Edited by billybong

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Quote

The ONS also added the value of personalised number plates - worth £2.3 billion - to the national balance sheet for the first time.

I was getting worried 'til I read that.

Can't be long before Osborne launches a help to buy a personalised number plate scheme.

Well spotted. More proof of figure fiddling desperation.

I spoke to a motorcycle dealer the other week. He said he thought the no. plate market had collapsed, he'd never had a sales from many promising plates in recent years despite 'valuations'

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Where are the other assets tied up?

London's financial market.

Lots of companies listed there. Some are predominantly British, many (including the vast majority of the biggest ones) multinational, while many more are really foreign companies that just find London a good place to list. So taken as a whole, they contribute more to the balance sheet than to the economy.

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If we're rich why can't a generation afford housing? Oh thats why we're rich is it? Um… okay.. :blink:

+1

Sounds like the situation that would obtain if you had a massive un-popped debt fuelled asset bubble. Has anyone seen any other evidence of one of those?

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