Tuesday, 16 July 2013
Definition of house banking
We are familiar with the concept of land banking whereby a person holds land not for its use but in the hope that it will serve as a good investment. They own the asset (in this case land) not because they need it for any particular purpose - even to utilise in business - but instead for its resale value. They hold the land because they can use it to raise funds (liquidity) at a later date. The same can be true of house banking whereby a person owns a house not entirely to use it for living but instead so that they will be able to sell it to other people in the future. This means that the house is not being fully utilised to its best potential and people in the economy who would be able to derive good use from it are being denied. Ideally people should only take the amount of housing they require and perhaps a bit extra for comfort. They should not seek to own as much of the housing stock as possible because then other people are being denied the ability to live in their own home.
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