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In saying property you're presumably looking at the land value combined with the remaining value of the structure, not the value of structure alone? Typically t

In saying property you're presumably looking at the land value combined with the remaining value of the structure, not the value of structure alone? Typically they are not separate line items in a sale even though if you did separate them you would see that the land is generally appreciating and the house generally depreciating. There are exceptions. Markets can do funny things from time to time, form irrational bubbles and whatnot. Even cars sometimes appreciate without any major repair or refurbishment costs. Tulips were once an appreciating asset, as the story goes. But as a rule, things that become outdated, wear out, and die lose value over time.

teh_klev 9y ago
In the UK buyers generally just see the structure and pay for what they think its worth, they tend not to think about the land (and whatever value it might also have) it sits on. Perhaps the exception to this would be garden size if the property isn't a flat (apartment). The reason for this is that it's pretty damned difficult to separate the two, especially physically. Planning laws generally discourage complete demolition of dwellings unless they're pretty much near collapse or there's been a fire that's gutted the place or in more extreme circumstances perhaps all or part of the house has fallen into a sink hole. In the UK, residential property (the structure bit) is, and has for a long time now been seen as an appreciating asset/investment. As I already said earlier, property here, if lived in and sensibly maintained, isn't considered something that "wears out" like a car body. It sounds like you're not from the UK so maybe all this is an alien concept. Edit: I forgot to mention that things get a wee bit more complex, especially in England and Wales because whilst you might own the structure, it's quite common that don't own the land it sits on. This is known as a leasehold, as opposed to a freehold where you the purchaser own the land as well as the building. Buyers of properties that are leasehold purchase their dwelling (typically with a mortgage) but also pay an annual ground rent to the leaseholder by way of a very long term lease (say 99+ years). Once upon a time the ground rent on the lease hold used to be a nominal amount of money, say GBP100/year. However...capitalism being capitalism, it's becoming more common for leasehold ground rent to be seen by certain investment houses as a nifty way of getting paid for doing bugger all. This can and has caused annual ground rents to increase to quite piss-taking levels. There are some attempts to get parliament to reform this leasehold situation after it was found that new-build housing estates were being sold to buyers on a leasehold basis but the leasehold condition is not made clear to purchasers. It's sneaky, and another way for house builders to extract another bundle of cash by selling off new-build estate leaseholds to some offshored company for a tidy sum leaving the buyers high and dry. It's often possible to buy out the leasehold, but even in the first year of ownership the cost can be prohibitive, especially after shelling out for your new house. It's not unheard of for leaseholders to charge say GBP5000-7000 in the first year and then double the cost each year afterwards, often locking buyers into the leasehold until they're able to sell the property. Then there's also problems and costs associated with renewing a leasehold, but that's a whole other expensive and morale sapping thing.
- randomdata 9y ago
  > It sounds like you're not from the UK so maybe all this is an alien concept. You are right that I am not from the UK, so perhaps things are different (lots of room for local exceptions, as detailed in previous comments), but where I am from people compare the cost of a home against the cost of other homes, including the cost of buying vacant land and building a new home. The value of the land is implicitly considered because they see the actual value of land when looking at vacant lots and weigh their options. Wear isn't the only consideration. An old home with low-amperage electricity service and nob and tube wiring that could burn down your home at any minute is less valuable than a home that is up to modern building standards. An old home with virtually no insulation is less valuable than a modern home that is airtight. These older features are more expensive to live with (higher insurance costs, higher energy costs, etc.) and the price has to reflect that. Same reason why a pristine car from the 80s is, in most cases (unless it has special collector value), still going to be worth less than a brand new model of equal original value in constant dollars. To put it another way, I live in a rural area. The value of my property would be worth almost ten times more if the identical house was situated on land in the nearest major city. The value is the land and where that land is located, not the structure. The structure itself is, in this hypothetical example, identical. If we tore down the houses in both spots, the vacant lot in the major city would still be worth almost ten times more than my now-vacant lot. Houses can be moved – location is the value. > As I already said earlier, property here, if lived in and sensibly maintained, isn't considered something that "wears out" like a car body. Even on the timescale of centuries? I don't see many century homes that haven't required major and costly updates to be still usable today. I don't think anyone is suggesting that houses deprecate as quickly as cars. There are exceptions. Price, of course, is still bound by supply and demand. There are reasons why used home structures may become scarce, while new homes are impossible to build, forcing people to compete for used homes. But this is not exactly typical.
  - teh_klev 9y ago
    > Even on the timescale of centuries? Well....centuries depends on how many centuries and what revolutions, unrest and discord might arise :) The village I live in (as were a few around this area), was completely razed to the ground during the 1715 Jacobite rebellion. So things kinda hard to start again and many of the houses in the core of the village were rebuilt between 1730'ish to the early 1800's. These old houses are highly valued, also the core village is also an architectural conservation area. I could discuss this stuff forever but I need to get stuff done today :)

teh_klev 9y ago

In the UK buyers generally just see the structure and pay for what they think its worth, they tend not to think about the land (and whatever value it might also have) it sits on. Perhaps the exception to this would be garden size if the property isn't a flat (apartment). The reason for this is that it's pretty damned difficult to separate the two, especially physically. Planning laws generally discourage complete demolition of dwellings unless they're pretty much near collapse or there's been a fire that's gutted the place or in more extreme circumstances perhaps all or part of the house has fallen into a sink hole. In the UK, residential property (the structure bit) is, and has for a long time now been seen as an appreciating asset/investment. As I already said earlier, property here, if lived in and sensibly maintained, isn't considered something that "wears out" like a car body. It sounds like you're not from the UK so maybe all this is an alien concept. Edit: I forgot to mention that things get a wee bit more complex, especially in England and Wales because whilst you might own the structure, it's quite common that don't own the land it sits on. This is known as a leasehold, as opposed to a freehold where you the purchaser own the land as well as the building. Buyers of properties that are leasehold purchase their dwelling (typically with a mortgage) but also pay an annual ground rent to the leaseholder by way of a very long term lease (say 99+ years). Once upon a time the ground rent on the lease hold used to be a nominal amount of money, say GBP100/year. However...capitalism being capitalism, it's becoming more common for leasehold ground rent to be seen by certain investment houses as a nifty way of getting paid for doing bugger all. This can and has caused annual ground rents to increase to quite piss-taking levels. There are some attempts to get parliament to reform this leasehold situation after it was found that new-build housing estates were being sold to buyers on a leasehold basis but the leasehold condition is not made clear to purchasers. It's sneaky, and another way for house builders to extract another bundle of cash by selling off new-build estate leaseholds to some offshored company for a tidy sum leaving the buyers high and dry. It's often possible to buy out the leasehold, but even in the first year of ownership the cost can be prohibitive, especially after shelling out for your new house. It's not unheard of for leaseholders to charge say GBP5000-7000 in the first year and then double the cost each year afterwards, often locking buyers into the leasehold until they're able to sell the property. Then there's also problems and costs associated with renewing a leasehold, but that's a whole other expensive and morale sapping thing.

randomdata 9y ago
> It sounds like you're not from the UK so maybe all this is an alien concept. You are right that I am not from the UK, so perhaps things are different (lots of room for local exceptions, as detailed in previous comments), but where I am from people compare the cost of a home against the cost of other homes, including the cost of buying vacant land and building a new home. The value of the land is implicitly considered because they see the actual value of land when looking at vacant lots and weigh their options. Wear isn't the only consideration. An old home with low-amperage electricity service and nob and tube wiring that could burn down your home at any minute is less valuable than a home that is up to modern building standards. An old home with virtually no insulation is less valuable than a modern home that is airtight. These older features are more expensive to live with (higher insurance costs, higher energy costs, etc.) and the price has to reflect that. Same reason why a pristine car from the 80s is, in most cases (unless it has special collector value), still going to be worth less than a brand new model of equal original value in constant dollars. To put it another way, I live in a rural area. The value of my property would be worth almost ten times more if the identical house was situated on land in the nearest major city. The value is the land and where that land is located, not the structure. The structure itself is, in this hypothetical example, identical. If we tore down the houses in both spots, the vacant lot in the major city would still be worth almost ten times more than my now-vacant lot. Houses can be moved – location is the value. > As I already said earlier, property here, if lived in and sensibly maintained, isn't considered something that "wears out" like a car body. Even on the timescale of centuries? I don't see many century homes that haven't required major and costly updates to be still usable today. I don't think anyone is suggesting that houses deprecate as quickly as cars. There are exceptions. Price, of course, is still bound by supply and demand. There are reasons why used home structures may become scarce, while new homes are impossible to build, forcing people to compete for used homes. But this is not exactly typical.
- teh_klev 9y ago
  > Even on the timescale of centuries? Well....centuries depends on how many centuries and what revolutions, unrest and discord might arise :) The village I live in (as were a few around this area), was completely razed to the ground during the 1715 Jacobite rebellion. So things kinda hard to start again and many of the houses in the core of the village were rebuilt between 1730'ish to the early 1800's. These old houses are highly valued, also the core village is also an architectural conservation area. I could discuss this stuff forever but I need to get stuff done today :)