8 Feb 2010

House 2.0 meets QI?

Here’s a vaguely interesting question. Which is worth more: the UK stock market or the UK housing market?

The housing market wins. It’s aggregate total value is somewhere around £4 trillion, somewhat over twice as much as the stock market. A trillion is 1,000 billion, which is itself is 1,000 million.

The value of the stock market can be checked here.

The value of the housing market is a bit more hazy, but by taking the rough number of houses (around 25 million) and multiplying them by the average value (£163,000 according to Nationwide) gives you an answer around £4 trillion.

The gilt (government debt) market is currently worth £700 billion - that’s £0.7 trillion - doubling in the past four years. It’s still a tiddler compared to property and equities, but then again it’s a mortgage, not a store of wealth.

You want more of this? Try comparing the value of individual companies to the value of housing in towns and cities. Our largest company (by market capitalisation) is HSBC which is currently worth £112 billion. That’s equivalent to 700,000 average homes, enough to house a city of 2 million population - say Greater Manchester. Of course, property in Manchester itself would be worth far more than the sum total of its housing stock, but then I’m not considering commercial or council property values here.

The 100th biggest company listed on the UK stockmarket is currently Thomas Cook, the travel agent. It’s value is £1.9 billion, equivalent to around 12,000 average houses, or a the housing stock of small town with a population of 30,000.


  1. Since when was HSBC a British company? And all of these "value of X" statements are meaningless as there is no intrinsic value in any of it - it's whatever the "market" thinks something is worth. Houses are no more worth X hundred thousand pounds than companies are worth X billion dollars. And don't forget the daily foreign exchange and derivatives markets trade in the several trillion dollar range - vastly dwarfing the stock market.

    From http://en.wikipedia.org/wiki/Foreign_exchange_market#Market_size_and_liquidity "Of the $3.98 trillion daily global turnover, trading in London accounted for around $1.36 trillion, or 34.1% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York accounted for 16.6%, and Tokyo accounted for 6.0%.[4] In addition to "traditional" turnover, $2.1 trillion was traded in derivatives."


  2. Nice rant Paul, did you want to add anything useful to the conversation?

    1. HSBC is not British (Traded on the UK stock market and pays UK tax. That makes it... British? No?)

    2. Value of X is meaningless (People pay what they think it is worth, I think you will find...)

    3. Derivatives are worth a lot more (I presume 2 doesn't apply to them then).

  3. "1. HSBC is not British"

    I stand corrected - I had forgotten about the forced domicile to the UK after the acquisition of Midland Bank.

    "Nice rant Paul, did you want to add anything useful to the conversation?"

    About as much as you apparently.

    "3. Derivatives are worth a lot more (I presume 2 doesn't apply to them then)."

    2 does apply, but the "value" is harder to ascertain - this was one of the main reasons for the financial crisis and partly why so many institutions were bailed out - otherwise their derivatives would be unwound and the real risk that their value was a lot closer to zero than the holders hoped. This is still a real risk too.

    All of which to say, it's a meaningless comparison to say one set of assets is worth more than another when the measure of their "value" is to a large extent intangible. But this is mistake many make in assuming that money has some extrinsic value.