Household Wealth Increases By £165,000

Thrugelmir

Then as a caveat the last few lines of the article tell a different story.

While it is encouraging that most people have been enjoying increasingly comfortable living standards, the fact remains that the wealth divide is at its widest point for more than 40 years, with 13.5 million people still in poverty.

So the average is pointless. As more people are in poverty despite an economic boom.

chucky

Thrugelmir wrote: »

So the average is pointless. As more people are in poverty despite an economic boom.

starving children in Africa are in poverty. people in the UK are not in poverty.

trying to convince anyone that people are in poverty in the UK is pointless.

nembot

Your home is an a rather awkward asset, to be used in such reports -savings in relation to debt would paint a completely different picture.

IveSeenTheLight

DaddyBear wrote: »

So as house prices rise, 'wealth' rises? Talk about stating the obvious.
A more interesting statistic would have been a comparison with 1950 that EXCLUDED housing equity. That would be nowhere near as high and is a far more relevant indicator of wealth.

If it's so obvious, what does that tell you?

marklv

chucky wrote: »

starving children in Africa are in poverty. people in the UK are not in poverty.

trying to convince anyone that people are in poverty in the UK is pointless.

Not true - poverty is relative. As nobody is left to starve to death in the UK your measurement of poverty obviously cannot apply here, but there are still many poor people.

marklv

nembot wrote: »

Your home is an a rather awkward asset, to be used in such reports -savings in relation to debt would paint a completely different picture.

Indeed. You can't just take some bricks out of your house and sell them, can you? You have to live somewhere, so a house is not an asset that can be spent easily, unless you sell and decide to rent for the rest of your life, which would impoverish you in the longer term. However a lot of people live in relatively sumptuous houses which they don't really need and then complain about being hard up on household incomes of £100k a year or more.

DaddyBear

IveSeenTheLight wrote: »

If it's so obvious, what does that tell you?

That people have been fooled into thinking they are richer, have used their home as a credit card and got themselves into too much debt.
Housing 'wealth' is irrelevant for most as it is primarily their shelter, thus it should be excluded when calculating a persons wealth IMO.

IveSeenTheLight

DaddyBear wrote: »

That people have been fooled into thinking they are richer, have used their home as a credit card and got themselves into too much debt.
Housing 'wealth' is irrelevant for most as it is primarily their shelter, thus it should be excluded when calculating a persons wealth IMO.

When it comes to peoples home, their shelter, history shows that most people climb up throughout most of their lives and then downsize in the twighlight years.

When it comes to the time when people downsize, isn't that wealth realised?

Regardless of this, lets take an example of two couples.

One rents, while the other bought.
10 years later, couple 1 is still renting and lets say couple two decide to sell up and then rent.
Couple 2 obviously have accumulated a wealth from the HPI in the property that couple 1 would never be able to gain.

Another example.

A couple get married, by a home and then 10 years later get divorced.
Isn't the home then divided up and the wealth re-distributed.

I understand the angle you are posing, however it is foolish to not understand that your home is also an asset.

DaddyBear

IveSeenTheLight wrote: »

When it comes to the time when people downsize, isn't that wealth realised?

Yes, but this represents a tiny minority of the population at any one time, and will never apply to some as not everyone downsizes.

IveSeenTheLight wrote: »

One rents, while the other bought.
10 years later, couple 1 is still renting and lets say couple two decide to sell up and then rent.
Couple 2 obviously have accumulated a wealth from the HPI in the property that couple 1 would never be able to gain.

I see you've been to the Hamish school of swinging generalisations. Why is it obvious that couple 2 has accumulated more wealth then couple 1? Couple 1 have clearly chosen a different investment vehicle for their cash. And they wouldn't have the costs associated with owning a house like maintainance. Presumably the mythical homeowning couple would also have moved at least once in that 10 year period. That's stamp duty, estate agent's fees, solicitor's fees etc.
If you exclude the period from 2002 to 2006 houses haven't performed that much better than other investments when you take into account costs.

IveSeenTheLight wrote: »

Another example.

A couple get married, by a home and then 10 years later get divorced.
Isn't the home then divided up and the wealth re-distributed.

This is the worst example you could have come up with. Yes, the wealth will be distributed, but the 2 individuals in question will find themselves with some cash but nowhere to live. Take out fees for selling and then 2 sets of fees for purchasing and they'll find themselves in a 1-bed flats.

IveSeenTheLight wrote: »

It is foolish to not understand that your home is also an asset.

I fully understand that a house is an asset. However, it is foolish not to realise that for the majority it is primarily a place to live. My argument in this thread was that a far better comparison of wealth between the generations would be to remove the value of the primary residence, since it is a relatively illiquid assest and has a much more important primary use.

Exocet

Here's how I calculate my household 'wealth'. Simple spreadsheet - mortgage, credit cards, loans on on side - cash, savings, shares on the other. The perceived value of the house does not come into it. Object of the exercise - to keep head above water.