ABSTRACT
It may seem strange to talk about scale and distribution of home owners’ equity in the aftermath of the longest and deepest slump in the home ownership market in Britain for many years. But, despite the marked falls in nominal house prices in Britain since 1989, and the even sharper fall in real prices (taking inflation into account), the surge in repossessions, and the rise of what came to be known as “negative equity”, the great majority of home owners in Britain, and all outright owners, continued to have substantial positive equity in their houses totalling several hundred billion pounds throughout the slump. Not surprisingly, media attention focused on those owners who suffered in the slump, but this should not distract us from the fact that the growth of home ownership in Britain since the War along with the massive house price inflation during the 1970s and 1980s has been associated with a major redistribution of wealth. As I shall show, housing wealth is one of the most equally distributed forms of wealth ownership in Britain, far more equal than ownership of land or stocks and shares and other traditional forms of wealth holding. This is not to say that housing wealth is evenly distributed, but that it is far less unequally distributed than other forms of wealth holding. Sixteen million households in Britain now own or are buying a house, and for most of them it is their largest capital asset. This chapter explores the importance of housing wealth and the distribution of housing equity, both positive and negative.
