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Total value of UK housing stock stands at record £7.39 trillion

The total value of the UK housing stock has increased by £2.74 trillion over the past decade, according to analysis.

Property agents Savills, which made the findings, said London and the South of England accounted for nearly three-quarters (73%), or £2 trillion, of the gains.

Across the UK, the combined value of the UK’s housing stock in 2019 was calculated to be a record high of £7.39 trillion after increasing by £101.8 billion over the previous year.

Home owners without a mortgage now account for £2.63 trillion in housing value, or 36% of the total.

The number has grown as older home owners clear their mortgage debt, Savills said.

Lawrence Bowles, senior research analyst at Savills, said: “Established homeowners have been the among the greatest beneficiaries of house price growth over the last decade, many of whom have paid down their borrowing.

“The value of unmortgaged owner-occupied homes has risen 67% over the last 10 years.

“This leaves an unprecedented 46% of home owner wealth in the hands of the over-65s.”

Savills also found some changing trends in what is behind the growing value of the UK’s housing stock.

New-build homes are accounting for a growing chunk of the increase in the value of the stock.

This is because house price growth has weakened in recent years while house building levels have increased.

Over the past decade, existing homes have accounted for 87% of the value uplift in the UK’s housing stock.

But, more recently, as housing development has accelerated and house price inflation has slowed, the balance has shifted – with new homes accounting for 40% of the value uplift in 2019.

There has also been a shift towards the North in terms of the parts of the country driving growth.

While London and the South of England accounted for 73% of the housing stock value gains over the past decade, in 2019 90% of the total housing value gains came from outside London and the South.

The Midlands and North of England accounted for nearly two-thirds (64%) of the value uplift, with a further 26% from Scotland, Wales and Northern Ireland combined.

Mr Bowles continued: “London and the South account for almost two-thirds (63%) of the nation’s housing value.

“But the rest of the country is catching up. The North and Midlands accounted for the majority of growth in the value of housing stock last year, thanks to faster house price growth and more development.”

Here are the total values of housing stock across the UK in 2019 and the one-year gain followed by the gain over the past decade, according to Savills Research:

– London, £1.774 trillion, £5 billion, £862 billion
– South East, £1.382 trillion, minus £5 billion, £555 billion
– East, £813 billion, £3 billion, £346 billion
– South West, £679 billion, £8 billion, £236 billion
– North West, £553 billion, £23 billion, £145 billion
– West Midlands, £482 billion, £14 billion, £154 billion
– Scotland, £412 billion, £12 billion, £110 billion
– East Midlands, £401 billion, £12 billion, £142 billion
– Yorkshire & the Humber, £395 billion, £13 billion, £99 billion
– Wales, £236 billion, £9 billion, £61 billion
– North East, £156 billion, £3 billion, £23 billion
– Northern Ireland, £106 billion, £6 billion, £11 billion
– UK, £7.388 trillion, £102 billion, £2.743 trillion

By Vicky Shaw

Source: Yahoo Finance UK

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Value of UK’s housing stock hits record high in 2018

The value of UK housing stock hit a record high in 2018, despite a slowdown in the housing market amid Brexit concerns, data showed.

The value of housing stock rose by £190bn, or 2.7%, to £7.29trn, with the private rented sector rising faster than other tenures, up 4.1% to £1.56bn, according to analysis released by real estate adviser Savills.

The report found that gains came from the regional markets, as London’s residential stock recorded a 1.5% fall, the first since 2009, losing £26.2bn.

Over a quarter of the total £190bn value increase came from new housing development, the highest proportion contributed by new housing development since 2011, reflecting the government focus on building more new homes.

Across the UK as a whole, price appreciation added a total £138bn, 72% of total gains, equivalent to growth of £4,800 per home.

The private rented sector exceeded £1.5trn for the first time and grew the fastest of any tenure at 4.1% to £60.9bn.

Equity now totals £1.32trn, leaving borrowing at under 14%, as the residential investment sector becomes increasingly dominated by cash investors.

Regional overview

Still, the total value of London’s homes stands at £1.77tn, some 24.3% of the UK total.

Wales was the region showing the biggest gains in percentage terms, with housing value up 6.3%, adding £13.4bn to total £226.1bn.

The East Midlands and West Midlands followed close behind, at 6.2% and 6.1% respectively.

Meanwhile the value of stock in the South East grew the fastest in absolute terms, with £29.9bn added on the back of growth of just 2.2%.

Wealth concentrated in older hands

Lawrence Bowles, residential research analyst at Savills, said that this analysis underlines the importance of housing to the economies of London and the UK as a whole, both as an asset class and store of private wealth.

He added: “We see that wealth concentrated in ever fewer, older hands, to the extent that the UK’s over 50s hold a quarter of all UK homeowner equity, while the over 65s in London and the South of England alone account for over three-quarters of the total.

“At the same time, as affordability becomes more stretched, younger households are having to put off buying their first home until later in life.

“It’s great that we’re seeing more housing delivery, but development will have to make up a much higher proportion of new housing value if we are to come anywhere need building the homes this country needs.”

Source: Your Money

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Value of UK’s housing stock soars past £6tn

The total value of all the houses in the UK has passed the £6tn mark for the first time, according to research by Halifax which also highlights the vast concentration of property wealth in London and the south-east.

The value of homes in London is now more than all the houses in Scotland, Wales and the north of England combined. The research also reveals how property values in the south have escalated since the financial crash of 2007-08, despite incomes remaining relatively flat.

In 2007 Halifax estimated that the UK’s housing stock was worth a total of £4,077bn, but over the past 10 years the figure has risen to £6,015bn.

To put the £6tn figure into context, it is nearly four times the size of the UK’s national debt, which is currently just over £1.8tn, and three times our total national output in 2016 (around £2tn). But even if every house in Britain was sold, the money raised would pay off less than half of the US’s national debt.

The big rises in the value of the UK’s housing stock have mostly taken place in the south. In 2007, the value of housing in the north-east was estimated at £114bn, but today it stands at £136bn – an increase of £22bn.

But in London, houses have jumped in value from £718bn in 2007 to £1,338bn today, a gain of £620bn. Over the same period the value of properties in Northern Ireland actually fell.

In total, 68% of private property wealth, amounting to £3.8tn, is concentrated in the south, up from 62% in 2007.

The stock of privately owned homes in Britain also increased in number from 21.5m to 23.4m.

Among the biggest gainers of property wealth in the south have been landlords and second home owners. Halifax said that while the average rate of owner-occupation in the UK was 63%, it stands at just 48% in London.

The vast majority of housing wealth is owned by the over-55s. Halifax estimated that under 35-year-olds own just 3.3% of the UK’s net property wealth, while the over-55s hold 63.3%.

Russell Galley, managing director at Halifax, said: “The value of housing stock has grown by close to £2tn in the past decade, and with the equity rich regions of London and the south-east largely responsible, it highlights a considerable regional imbalance in the distribution of housing wealth.

“Within the capital there is also a mix of fortunes. While more than a fifth of total property wealth is in London, lower levels of owner-occupation reflect a major barrier to the property ladder with a far greater number of people renting where house prices are at their highest.”

The property market has bestowed much higher levels of housing equity – the difference between the value of a home and the outstanding mortgage – on people living in the south. Halifax estimated that the average homeowner in London has net equity worth £360,193, compared to £134,273 in the north-west of England.

How housing stock values have changed – 2007-2017

North-east £114bn to £136bn

North-west £355bn to £469bn

Yorkshire and the Humber £262bn to £341bn

East Midlands £244bn to £327bn

West Midlands £294bn to £361bn

East £421bn to £688bn

London £718bn to £1,270bn

South-east £732bn to £1,089bn

South-west £401bn to £554bn

Scotland £257bn to £349bn

Wales £161bn to £183bn

Northern Ireland £121bn to £92bn

UK as a whole £4,077bn to £6015bn

Source: The Guardian

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Can Britain really cope with a fall in housing prices?

Britain is locked in a seemingly constant battle with the burden of its overheated housing market. Theresa May has announced measures at the Conservative Party conference designed, at the very least, to dampen criticism over a lack of housing and ever-increasing prices.

It is unclear for now just what impact May’s announcement for land releases and an extra £2 billion for affordable housing may have. After all, the UK’s housing stock is valued at close to £7 trillion. But her announcement comes after London real estate prices registered their biggest fall in a decade, stoking expectations for further drops in real estate prices.

But what would falling house prices mean for Britain? How might it affect employment, household consumption, investment, the government deficit and, critically, the UK current account – the net measure of cash flows in and out of the economy.

The greater fool

Brexit and associated uncertainty about the future of the UK financial sector are making real estate investors, home buyers and households more cautious. One of the things that has fuelled London real-estate prices over the years is the “greater fool” mechanism. Buyers knew that a property was expensive, and perhaps ridiculously expensive, but they counted on the fact that they could sell it later to a “greater fool” at an even higher price, for a handsome profit.

That phenomenon was perhaps best displayed in the first recorded crisis in free markets. Tulip mania in 17th century Holland built to a crescendo which saw single, rare tulip bulbs change hands for extraordinary sums. Historian Mike Dash has described it as enough to “purchase one of the grandest homes on the most fashionable canal in Amsterdam for cash, complete with a coach house and an 80 foot garden”.

As tulip mania went on to show, however, if prices show indications of a fall, the upward trend reverses violently. If property investors become skittish, they will try to sell before prices fall further, and all of them at the same time. Property values built over decades could collapse within months: the expectation of falling prices causes the falling prices.

This mechanism is a real danger in London which relies heavily on local and international investors who view properties not as a home but as a commodity, readily sold to maximise profit. In 2013 alone, international investors accounted for 82% of London property activity.

Falling for it

However, most properties in the UK still belong to households. Families, by and large, don’t need to sell. So what would falling property prices mean for them?

First, many pension funds and investment bonds rely on UK property to generate income for their beneficiaries. Second, we have what economists call the Wealth Effect.

Economists have long associated consumers’ perceived real estate wealth with spending behaviour: if you believe your house is worth a lot, you feel financially secure. And then you allow yourself to save less and spend more. Just consider the rising number of people who plan to subsidise their retirement with wealth generated by their homes.

If their assumed valuations start to look shaky, these people will spend less to build up their savings. The pain would be felt by many: about 64% of households in England are owner-occupiers.