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Financial Times Says 40 Per Cent Of The Uk "wealth" Is An Illusion

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It is supposed to be subscription, but i clicked the link and it opened, and i don't have a subscription.

http://www.ft.com/cms/s/0/8d5c6ed8-0c0a-11e4-a096-00144feabdc0.html

I know we can't copy their articles in forums. So i'll just give a very short general idea with my own words. They say more than £3th of assets = 40 percent of UK wealth, are what planning restrictions have added to house prices, they are the ransom that recent buyers and renters are forced to pay to homeowners, this is plunder, from younger to older, from poorer to richer. But if we let people build more houses we turn the false wealth into real wealth of houses and flats, improving living conditions, creating jobs, and making society fairer and more equal.

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There is little sign than the UK public want the UK to be less like the UK though.

That is true. But i think the main reason the UK public is against new houses is because they still think the UK is much more "concreted over" than it actually is, like i wrote in my other topic. I still think or hope that if the main media tells the UK public that only some 4% of Britain is actually concreted over then i think the public would change their minds?

I have to hope for this, otherwise they would be just pure effing evil bastards! It would be too depressing. I can't believe that.

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http://onlinelibrary.wiley.com/doi/10.1111/j.1467-856X.2009.00380.x/abstract

The transformation in personal fortunes that this kind of reversal in the housing
market represents is easy to illustrate. Consider, for instance, the situation in
November 2006 when the average house price in the UK topped £200,000 for the
first time. At that point average annual earnings were about £30,000 and house
prices were increasing at an annual rate of 11 per cent. In effect, the wealth effect
associated with house price inflation was the equivalent of three quarters of pre-tax
annual average earnings. Unremarkably, for many this proved an irresistible incen-
tive to release equity to fuel consumption. Our own calculations suggest that such
credit-based consumption was, between 2004 and 2006, typically worth between 4
and 6 per cent of GDP—or, in other words, responsible in and of itself for keeping
the UK economy in growth at what most would see as a relatively high point in the
economic cycle (Hay et al. 2006).

This paper is from a few years ago and it's the authors have come up with the 4-6% added to GDP but they failed to make the next logical step and take the accumulative effect as in compound interest. My own guess is that perhaps 50% of the wealth is illusionary however a collapse could wipe off more as a correction would likely destroy more than just the excess.

It's not surprising they are doing all they can to prop up this imaginary wealth as they don't want to admit millions of people are like the emperor and walking about naked.

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"But if we let people build more houses" Not in my back garden...never, never, never, if young people did not by so many iPods they could easily afford a nice family house in their 20s!

depressing...

you are right, i know.

But can't we change their minds? Can't we make them see reason? And fairness?

depressing.

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That is true. But i think the main reason the UK public is against new houses is because they still think the UK is much more "concreted over" than it actually is, like i wrote in my other topic. I still think or hope that if the main media tells the UK public that only some 4% of Britain is actually concreted over then i think the public would change their minds?

I have to hope for this, otherwise they would be just pure effing evil bastards! It would be too depressing. I can't believe that.

It isn't just the approach to planning though, it is the UK public not being able to come to terms with giving up the short termism that means that any government that comes up with a long term plan for wealth creation based upon anything other than HPI, debt, selling off the family silver, tax cuts from North sea oil/Gas instead of investing will not get into power in order to do anything long term. The only way I fear for the great British public to understand that is for the illusionary wealth to disappear following events outside the control of the UK. That time will come.

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"But if we let people build more houses" Not in my back garden...never, never, never, if young people did not by so many iPods they could easily afford a nice family house in their 20s!

Although I've found many people who oppose development in their areas are delighted to get planning permission to build a house in their own back garden when it means raking in a couple of hundred thousand pounds.

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It isn't just the approach to planning though, it is the UK public not being able to come to terms with giving up the short termism that means that any government that comes up with a long term plan for wealth creation based upon anything other than HPI, debt, selling off the family silver, tax cuts from North sea oil/Gas instead of investing will not get into power in order to do anything long term. The only way I fear for the great British public to understand that is for the illusionary wealth to disappear following events outside the control of the UK. That time will come.

Maybe, but many long term projects are approved, like Crossrail, and many windfarms and maybe even the high speed train? I think the UK public opposition to housing is much stronger than to other long term investments.

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Although I've found many people who oppose development in their areas are delighted to get planning permission to build a house in their own back garden when it means raking in a couple of hundred thousand pounds.

Yes. I know a few people like that too.

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Seems they have a very dim view on the true value of our housing stock. To get a handle on this I googled this.......

http://www.savills.co.uk/_news/article/72418/172125-0/1/2014/uk-housing-stock-value-climbs-to-%C2%A35-205-000-000-000-but-the-gap-between-the-haves-and-the-have-nots-grows

So they are discounting it by almost 60%.

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Although I've found many people who oppose development in their areas are delighted to get planning permission to build a house in their own back garden when it means raking in a couple of hundred thousand pounds.

YUp! I have said it before - never trust a hippie or a left winger/environmentalist when there is hard cash on the table. You'll lose a finger.

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FT protecting their own.

Yeah, i noticed that too.

But i don't think these two things are necessarily connected. We should target BOTH, tax the 1 % AND let people build more houses.

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Although I've found many people who oppose development in their areas are delighted to get planning permission to build a house in their own back garden when it means raking in a couple of hundred thousand pounds.

sure

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Although I've found many people who oppose development in their areas are delighted to get planning permission to build a house in their own back garden when it means raking in a couple of hundred thousand pounds.

....then selling up and moving away, leaving their neighbours to look at it......or building around others homes but kicking up a stink when others want to build around their home......what comes around goes around. ;)

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Although I've found many people who oppose development in their areas are delighted to get planning permission to build a house in their own back garden when it means raking in a couple of hundred thousand pounds.

The current system breeds selfishness.

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Even if you tackled planning the 1% would still end up trousering the £3TN somehow

Yeah ! Booo!!!

Ya know, no matter how wealth is distributed, there will always be a top 1%. Thats called mafs. I reckon thatcher did that. Ya know, mafs. Booo!

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Ya know, no matter how wealth is distributed, there will always be a top 1%. Thats called mafs. I reckon thatcher did that. Ya know, mafs. Booo!

That's a disappointingly literal interpretation of "the top 1%".

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Yeah ! Booo!!!

Ya know, no matter how wealth is distributed, there will always be a top 1%. Thats called mafs. I reckon thatcher did that. Ya know, mafs. Booo!

Oh well whatever.

But at some stage you really have got to shake the Monopoly board up a bit. Whether it be debt forgiveness or land redistribution, or the game slows down or stops entirely

Edited by aSecureTenant

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From that same article...

952f5b66-0c3c-11e4-943b-00144feabdc0.gif

Comparing UK and US,

value of houses are similar, both around 80 % or 90 %,

but residential land values are world apart, around 40 % in the US but around 200 % here.

9446362a-0c3c-11e4-943b-00144feabdc0.gif

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But at some stage you really have got to shake the Monopoly board up a bit. Whether it be debt forgiveness or land redistribution, or the game slows down or stops entirely

I do agree. Social mobility is the mechanism, artificially high house prices are profoundly damaging to social mobility.

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