6. The UK’s land is valued at 51% of net worth in 2016, compared with an average of 39% in measured G7 countries

With land making up 51% of UK net worth in 2016, this puts it higher than any other G7 country measured and 12 percentage points above the average of 39%. Figure 3 shows that the UK is 9 percentage points above France (42%), which is the second-highest, and the UK total is also almost double that of Germany (26%).

Figure 3: Value of countries land as a percentage of net worth, 1995 to 2016 UK, Canada, France, Germany, Japan Source: Office for National Statistics, Statistics Canada, National Institute of Statistics and Economic Studies, Federal Statistical Office of Germany, Organisation for Economic Co-operation and Development Notes: Data for Germany only available for the period 1999 to 2016. Data not available for Italy or the United States. Download this chart Figure 3: Value of countries land as a percentage of net worth, 1995 to 2016 Image .csv .xls

Figure 4 shows how changes in non-household land have had little effect on the net worth of land for the UK, Canada and Germany. France saw large increases in the value of non-household land that meant that it rose from the country with the lowest value of non-household land as a percentage of net worth in 1998, to the highest in 2004; from 5.9% to 15.5%.

Figure 4: Value of countries land excluding the household sector as a percentage of net worth, 1995 to 2016 UK, Canada, France, Germany, Japan Source: Office for National Statistics, Statistics Canada, National Institute of Statistics and Economic Studies, Federal Statistical Office of Germany, Organisation for Economic Co-operation and Development Notes: Data for Germany only available for the period 1999 to 2016. Data for Germany and Japan excludes the non-profit institution serving households sector. Download this chart Figure 4: Value of countries land excluding the household sector as a percentage of net worth, 1995 to 2016 Image .csv .xls

The main cause of the differences in total land values is the housing market cycles that each country went through during the period. Table 3 shows that the French land values in the household sector showed strong growth between 1995 and 2007, which was similar to growth in the French non-household sectors. This may be due to changes in financial conditions in France during this period, such as increased availability of mortgages and incentives for first time buyers. Even with this rapid growth, because of the lower value of land compared with the UK, it still did not reach the level of the UK.

Table 3: Compound annual growth rates of household land for G7 countries Coverage: UK, France, Germany, Canada, Japan, 1995 to 2017 % Country 1995 to 2007 2007 to 2008 2008 to 2009 2009 to 2016 1995 to 2016 UK 14.7 -22.0 7.0 5.6 9.2 France 18.7 -11.0 -3.0 1.5 10.1 Germany1,2 2.3 1.0 2.0 5.0 3.4 Canada 9.1 1.0 10.0 8.9 8.6 Japan2 -3.0 -1.0 -4.0 -0.6 -2.2 Source: Office for National Statistics Notes: 1. Data for Germany only available for the period 1999 to 2016. 2. Data for Germany and Japan includes the non-profit institution serving households sector. Download this table Table 3: Compound annual growth rates of household land for G7 countries .xls (27.6 kB)

Germany’s household land value on the other hand, grew steadily as the cost of building land increased despite house prices remaining relatively steady between 2000 and 2007. Land values showed little variation through the economic downturn as Germany recovered very quickly during this period compared with other European countries. Growth in the value of household land has increased at a faster rate in recent years, as rising population has put pressure on the stock of houses. Despite this, the value of all land in Germany has not increased as a percentage of net worth.

Canada’s household land value followed a similar trend of steady growth to Germany, though it grew at a much faster rate. The fast recovery in land prices during the economic downturn may be due to its strong banking system and changes in government financial policies during the period to stimulate growth in real estate.

Japan showed a very different trend to the other measured G7 countries, with a pattern of continuous decline. This is due to real estate speculation in the 1980s and early 1990s increasing the value of land. This can be seen in 1995, where land was worth 53% of Japan’s net worth. An economic collapse following this speculation caused a decline in land prices and a period of deflation and low economic growth following this meant that land values have only started to increase again in recent years. This speculation and subsequent decline in value also affected the non-household sectors; non-household land value dropped from 20% of total net worth in 1995 to just 12.7% in 2016.