Housing ‘wealth’ is like Schrodingers cat – its there but its not there!

Housing ‘wealth’ is like Schrodingers cat – its there but its not there!

Much is made of the wealth of those with higher value dwellings but what does it really amount to? This post will examine the issues related to housing values across different areas. 

If we look at house values in Kensington & Chelsea median house prices in 2025 were £1,150,000. This compares to £140,000 in Blaenau Gwent and £143,000 in County Durham.  

So residents in Kensington & Chelsea are on this basis eight times more wealthy than residents in Blaenau Gwent or are they?  As with Schrodingers cat they are and they are not.  

At first it appears that someone with a property in Kensington & Chelsea is well off in terms of what their property is worth. But we have to examine this more closely.  

The value of a dwelling for households in any area has to be compared to values for related properties in the area.  If a household wants to move house within the same or a similar area and buy a property of the same type, they will find in general that the price they will have to pay will approximate the price they get for their existing property.  They will not have gained. 

So the ‘wealth’ of a resident of Kensington & Chelsea who moves house within the borough does not benefit them.  If however, someone sells and moves to a lower price area such as Cornwall they will have funds to buy a similar property or a larger one or of course a house and a holiday let. [Policies to mitigate that effect will be covered in the next post].

A comparable situation applies to residents of Blaenau Gwent.  If they move house in the area they will neither gain or lose due to the lower value of their housing assets.  It should also be stressed that the ‘wealth’ in a house is locked in and for most people that is the reality.  It is possible for a household to borrow against the value of their property and use the funds to acquire another property.  That again requires an appropriate policy to limit that activity. 

The data in the table sets out house prices, earnings and the ratio between the two for selected areas. The affordability ratio here is of interest. It is far worse in Kensington and Chelsea reflecting not only higher earnings but the use of properties for leisure uses and investment.

Despite having similar earnings levels to Blaenau Gwent, affordability is far worse in Cornwall.  This reflects the use of properties for leisure purposes and the movement of people from more affluent areas.  [A situation to be dealt with in the next blog post].

	Median house price	Median gross annual residence-based earnings	Ratio
Area	£	£	No.
Kensington & Chelsea	1,150,000	52,576	21.9
Blaenau Gwent	140,000	34,797	4.0
County Durham	143,000	33,436	4.3
Cornwall	290,000	35,002	8.3

Notes

“Schrödinger's cat is a famous thought experiment designed by physicist Erwin Schrödinger to expose the bizarre, counter-intuitive nature of quantum mechanics. It proposes that a hypothetical cat in a closed box is simultaneously both alive and dead until the box is opened and its state is observed”   Wikipedia.

Sources

Office for National Statistics (ONS), released 26 March 2026, ONS website, statistical bulletin, Housing affordability in England and Wales: 2025