Lie #1: I paid for my land
Lie #2: The rebuild cost of my house is much higher than what you say, so only a small part of the total current value relates to land.
I'm not disputing that people paid for the cost/value of the building, I am talking about the land element.
Having argued over the numbers with Bayard, this is what it boils down to. Assume average house price has gone up from £60,000 to £210,000 and that RPI inflation was 50%:
My view:
1994
Average price - £60,000
Build cost/value - £54,000
Balance is land value - £6,000
2014
Average price - £210,000
Build cost/value - £81,000 (£54,000 + 50% inflation)
Balance is land value - £129,000
If we index up the original £6,000 we get £9,000, meaning that people who bought in the good old days when houses cost about three times the gross average salary (from 1945 to 2001, ignoring a couple of spikes) only paid for 7% of what the land is now worth.
Bayard's view:
1994
Average price - £60,000
Build cost/value - £40,000
Balance is land value - £20,000
2014
Average price - £210,000
Build cost/value - £60,000 (£40,000 + 50% inflation)
Balance is land value - £150,000
Even if Bayard is correct, that would still mean that older owners only paid for one-fifth of the current value of the land on which their house sits.
The rest was a free gift, kindly engineered for us by the UK government when we had rent controls and mortgage restrictions etc, a free gift which the neo-liberals took away again from the 1980s onwards, with the Boomers and Homeys cheering them on.
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