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Someone with £1m in London is definitely more wealthy, because they have the option to move to a village and buy property to rent out with whatever is left over after they move into their cottage.

Or they could buy a huge rental house in a student town and make around £60k to £90k a year in rent.

If they rent cheaply themselves and put all the profit into more property, they can easily double the £1m in less than a decade without having a day job at all.

Repeat for another couple of decades, and they have a sizeable property empire. With some medium risk/return investing they can be well into the high net worth bracket well before retirement age.

This is the point of being in the 1%. Beyond a certain level you don't need to contribute anything useful in the way of imagination, creativity, or talent. You just need to own stuff and have cash to spare. As long as you take some fairly simple steps the money grows itself with very little effort or skill on your part. It's a classic feedback loop, and it will work for you as long as you let it.

Compare this with someone in poverty, where it's likely that whatever they do they will remain in debt once they get into debt. Unless they start dealing drugs, or winning the lottery, or building an unusually successful app or business (in their spare time while working three jobs at once), the feedback loop pushes them down and keeps them down.

> If they rent cheaply themselves and put all the profit into more property, they can easily double the £1m in less than a decade without having a day job at all. Repeat for another couple of decades, and they have a sizeable property empire.

Real estate investing may not fit a tight definition of "day job", but the part of it that you describe above is absolutely hard work, IMO.

> But in practice you are not really wealthier than someone who owns a £200k home in a village.

Yes, you absolutely 100% are. You could sell your London home, move to that village, and live off the proceeds.

Saying you aren't wealthy because you happen to live in your biggest asset is delusional (and part of a dominant political narrative promoted by the homeowner class).

Consider what would happen if a major financial bill struck each family (like, $500k). The London family might be forced to sell their flat and move into an apartment (or move out of London). The village family would lose everything they own and still be in debt.

Where would 1,000,000 londoners go? This is purely theoretical, which is exactly my point. On paper they are rich, in practice not to much.

There are tens of thousands of cities around the world they could go to. They could even just stay in London, renting instead of buying.

I would much rather own a $1m house than a $200k house. Pretending otherwise is just ridiculous.

well you are wealthier. you have the option of selling your home and move to a village. the villager does not.

The additional option available to you is brought to you by your wealth

But again, no one really does that. And unless people do it en masse, that population is not really wealthier.

How much is en masse? There are enough people relocating to my town buying homes with cash, from the sale of their much more expensive homes, that it makes buying a home for the current residents very difficult.

I'd say they were more wealthy for their property value and converted that value into liquid wealth by moving locations.

Why would selling houses en masse be necessary condition to call the owners wealthy? The mere ownership makes them wealthy, not their selling activities.

We care about wealth because we care about power. An liquidity asset is like an empty threat.

It is very true while real-estate in the abstract is liquid enough, nobody likes to move so owner-occupiers are hard to compare to landlords, traders of real estate, etc.

This is just ad-hoc changing the definition of wealth to suit your particular need at this particular time.