From page 2 of today's paper edition:
Land and housing boom The UK's net worth rose £492bn last year due to surge in property prices and the value of land... Almost all of the rise was fueled by a £450bn land value rise, while housing added £40bn
The UK's net worth clearly does not change one single penny because land values change. At best, land values are an indication that the productive economy is doing well and the country is being well run.
Firstly, the value of land fluctuates inversely to interest rates (or proportional to credit availability) so it is not real, hard capital. Do we as a nation become wealthier just because interest rates fall? I doubt it.
Secondly, land values are merely the net present value of wealth that will flow from elsewhere to today's landowners, whether that flow is direct (rent or selling prices) or indirect (all the public services funded out of taxes on output and employment).
If you take into account the net present value of the equal and opposite flows of wealth from tenants, buyers and taxpayers, the net value of land is at best £nil, and probably a negative.
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UPDATE, Dinero, in the comments:
I don't deny that defining wealth is a subtle point, but I don't see that it is obtuse to define expected future income as wealth.
Money is an IOU from the bank financed from its creditors future income and that is considered wealth.
Even physical commodities like oil and gold are valuable because of the expectation that someone will them it in the future.
If you are going to include future income from other people as wealth, then you must also include the future expenses to be incurred by those other people as negative wealth, in which case the net value of land is still nothing.
Money, like land, is wealth from the point of view of the depositor or landowner. But money is even less net wealth than land is. If one person has 'money' then somebody else somewhere owes the same amount, if you take all positive money balances and all negative balances (debts, mortgages) it nets off to precisely zero. Money is merely a measurement of indebtedness from one person to another and not net wealth.
Oil and gold are actual, useful things. They are real net wealth. Just because one person has oil or gold doesn't mean that somebody else has negative oil or gold, i.e. it would be theoretically possible for everybody in the world to own a small amount of gold and a small amount of oil. It is impossible for everybody to have a positive money balance.
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