More than 80% of the world’s savings are invested in property, mostly residential.

Not sure that “world” has much to do with the British tax system. Where it’s more like one third – £5 trillion of £15 trillion in household wealth – that’s in property.

15 thoughts on “Eh?”

  1. It’s a very British attitude to property to regard it as an investment. Most people in the world don’t. The land’s an amenity. A building on it a utility. The whole parcel might have value if you sold it. But if you sold it, you would be able to use it for what you’re currently using it. If you wanted to continue doing that, you’d have to buy another one.
    As a safe store of wealth it’s not a particularly good deal. To get liquidity you have to sell it. Means someone else has to buy it so, unless you’re selling for purely personal reasons, you could find that that you’re trying to do so at the same time as a lot of other owners. And no one’s buying.

  2. Following Hernando de Soto, the more interesting statistic would be the proportion of business loans that are secured against private property. De Soto makes the point that uncertainty of ownership (in barrios, or just because the Land Registry is shite)is a major impediment to business growth.

  3. Can someone persuade Sir Kneel Starmer that what we need is a poverty tax? It’s we’ll known that whatever you tax you get less of. So, win win.

  4. Tim,

    That £5tn from £15tn isn’t complete.

    You need to analyse this:

    https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/datasets/thenationalbalancesheetestimates/current

    Table C for example.

    Yes, the lion’s share of UK net wealth is indeed land and buildings (property), by the time you net off financial assets and financial liabilities.

    (They do say “world’s” compared to your “household”; the ONS above includes UK total, not just UK household.)

  5. As a safe store of wealth it’s not a particularly good deal. To get liquidity you have to sell it. Means someone else has to buy it so, unless you’re selling for purely personal reasons, you could find that that you’re trying to do so at the same time as a lot of other owners. And no one’s buying.

    Compared with, say, gold bars? Watches? Shares in IBM?

    Rather than sell outright, you can mortgage a property, gaining a chunk of liquidity whilst retaining the utility of it. Manage your affairs successfully and you regain ownership. The simple fact that you can secure loans against it indicates that property is regarded as a safe store of wealth.

    It’s a very British attitude to property to regard it as an investment. Most people in the world don’t.

    Something to do with respect for justice and the rule of law, I suspect. Quite a lot of foreign doesn’t have that.

    https://www.dailymail.co.uk/news/article-9796209/British-woman-75-loses-dream-Spanish-home-13-year-legal-battle-wall.html

  6. I sneeze in threes

    Or, buying housing is expensive (but in the long run cheaper than renting). After paying to buy somewhere not much is left over to invest in other assets. You could/should argue that you shouldn’t include you main abode in the category of investments.

  7. When is anyone going to lend you a six-figure (yes, or seven) sum for you to use to buy speculative assets with a strong potential to retain most of its value no matter what? When you are buying a house, that’s when. AND you save on rent.

  8. There’s plenty of chat in the papers about the Chancellor possibly restricting pension contributions e.g. by reducing the Lifetime Allowance or the Annual Allowance. There’s also chat about his reducing the tax relief for contributions by higher rate taxpayers.

    Where would the punters then put their money? Into housing I suppose. What’s the simplest way to bet on a house price boom without actually buying a bigger house, or more houses? Asking for a friend.

  9. “Rather than sell outright, you can mortgage a property, gaining a chunk of liquidity whilst retaining the utility of it. Manage your affairs successfully and you regain ownership. The simple fact that you can secure loans against it indicates that property is regarded as a safe store of wealth.”
    Complete & absolute bollocks.
    You can’t use property to secure a loan unless the lender thinks the asset is convertible into money to cover the loan. So it’s back again to property only having value if there are buyers for it.
    The DailyWail article rather illustrates the point. I know Salobrena quite well. A property’s not an asset. It’s a liability. As the woman’s found out. It’s been sold for peanuts because no one’s buying anything here. But look at the photos of where it’s been built. Wouldn’t be the least surprised if the house fell over next. You’re not going to stabilise that mountainside for 18 grand. Take a lot of concrete & steel. But Brit. What can you expect?

  10. It’s a home. Full stop! Investment, income? The sole point of a property is somewhere to live in. When you’re done you buy another place of comparable value to move to. Your investments, pensions, savings, are another matter. And they determine your lifestyle.

  11. I got up at six this morning (Sunday) to climb ladders and scrub masonry prior to sanding, priming and painting the wooden bits. Owning a property is a pain – renting is my idea of winning the lottery. Unfortunately no one rents the sort of property you want to live in.

  12. BiS

    Indeed.

    Right now (ish) in the USA – well, in Texas – a proper bank will indeed give you a fine loan secured on the value of your house. I did that a couple of years back to cover a money gap between buying the glorious (and not v expensive) place we’re in now in Normandy and managing to get someone to buy the old thatched cottage we were in.

    But Chase were happy to provide a line of credit for about 50% of the alleged value of the property (which is what I’d expected).

    Right now, Austin Texas is being flooded by idiot Californians fleeing the wreckage of their state (and then seeking to do the same things in Texas, of course; they’re idiots, after all). The immediate result is ginormous inflation – our sorta $650K property of two years ago is now “valued at” around $1.2M….

    I doubt the bank would lend me $600K secured on it, though…

  13. Equity release loans on your home are a handy addition to a pension.

    No interest, no repayments, no tax.

  14. You can’t use property to secure a loan unless the lender thinks the asset is convertible into money to cover the loan.

    But they generally do, don’t they. There’s a vast service industry based around that £5 Trillion.

    So it’s back again to property only having value if there are buyers for it.

    Everything only has value* if there are buyers for it. It’s an peculiar point to be labouring whilst hurling “complete and utter bollocks” at statements of obvious fact.

    *Trade value, obviously. Things can have value for their owners (usually why they own them).

  15. OK, everything is owned by someone, so isn’t this something like a given, that most of the value of capital things is in land and buildings, rather than gold bars or paintings, or intangible assetts like ‘goodwill’?

    Maybe an economist could explain why this is important or interesting.

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