Thoughts from our Property Experts

Understanding the value of stock

by Adrian Black Adrian Black, author of this post , Thursday 27 November 2014


If the value of housing stock has soared by £630bn in a year and new build is still very modest then there has to be something wrong with planning policy (with which a number would agree).

It’s not really the value of housing stock that has increased by £630bn, but the value of land that the houses sit on which has increased - since a brick is still a brick and costs roughly the same as it did a year ago.

It is a difficult line for the Government to take to keep the values of homes high as it still works through banking issues while, at the same time, peddling the appealing concept of more homes for young people.  Providing more homes is pretty easy - what we need is to provide more land for building – as we, and a number of other commentators, have said before. We have only built on around 10% of the UK and freeing up another 2% of land for building would help significantly.

Other useful numbers from the recent Halifax research and our comments below:

1. The current value of the UK's private housing stock is estimated at £5.06 trillion.

2. The increase of £1.83 trillion is equivalent to £79,262 per household in the owner-occupied and private rented sectors since 2004. The increase in the value of the UK private residential housing stock has outstripped rises in consumer prices, with the retail price index up by 37% in the past decade.

3. In the past year, the value of the UK's private housing stock has grown 14% (£630bn) from £4.43 trillion. This rise is the fastest annual growth since 2002 (21%)

4. Regionally, over the last 12 months the value of housing stock in London is estimated to have grown by £217bn and by £123bn in the South East; the two regions accounting for more than half of the total growth of the value of housing stock across the UK.

5. The largest increase was in London where the value of housing stock has more than doubled (109%) from £545bn in 2004 to £1.14 trillion in 2014. The capital is closely followed by Scotland, which has seen a rise of 96% (from £170bn to £333bn). However, there have been much smaller increases elsewhere with the smallest rises in the West Midlands (32%) and the North East (33%).

6. The value of mortgage debt has risen by 47% since 2004 (from £877bn to £1.29 trillion), but at the same time the value of the private housing stock has grown by more than four times as much as outstanding mortgage debt. As such, housing equity has increased by £1.42 trillion (61%) over the decade from £2.34 trillion in 2002 to £3.76 trillion. – this is quite a healthy number, but it is probably in significant part a pension pot.

7. Regionally, there is a wide variation in the level of housing equity, with a higher balance in the south compared to northern areas. On average, the highest amounts of equity are in London where housing equity is estimated at £820bn, which is equivalent to £313,466 per household. The capital is followed by the South East (£726bn or £219,163 per household), and the East (£447bn or £203,462 per household).

8. Outside southern England, the highest average equity levels are in Scotland (£249bn, £126,930 per household), the North West (£278bn or £106,011 per household), and West Midlands (£248bn or £125,532 per household). The lowest housing equity is in the North East (£84bn or £91,641 per household) and Northern Ireland (£14bn or £21,519 per household).  There are an estimated 7.2 million households in England that own their home outright and are mortgage free.”