There are very few things in life that we celebrate becoming more expensive. When the price of petrol increases, we complain. When electricity bills rise, we complain. When supermarkets put up their prices, we complain. Yet when house prices increase by 10%, it is frequently reported as good news, with homeowners congratulating themselves on having become considerably wealthier without having done anything at all.

I have always found this slightly peculiar. Everybody needs somewhere to live, so why should an increase in the cost of housing be regarded as a positive development? If I buy a house for £500,000 (this is always expressed out loud as “half a MILLION pounds”) and its value increases to £600,000, I might feel £100,000 wealthier, but unless I am intending to sell it and move somewhere cheaper, I haven’t actually gained very much. If anything, should I wish to move into a more expensive house, I might find myself worse off because the property I want to purchase has also increased in value.

Really, there are only two particularly obvious circumstances in which rising property prices leave you substantially better off: (i) you own a property and are planning to downsize; or (ii) your property-owning mum is about to die and you are her sole beneficiary.

This isn’t to suggest that homeownership is a bad thing. Owning a home provides security, stability and will always be more of a ‘home’ than somewhere that you rent. But somewhere along the way, Britain seems to have developed the idea that rising house prices are not merely a welcome consequence of economic prosperity, but something to be actively encouraged.

Rory Sutherland made an interesting observation in a recent Spectator article (https://spectator.com/article/the-property-market-has-become-a-ponzi-scheme/), recalling how he purchased his first London flat for £68,000 in 1990, at a time when he was also considering investing in shares in a promising American company called Microsoft. Banks were perfectly happy to lend him money to purchase the property, but would not have been similarly enthusiastic about lending him money to purchase shares.

There is something revealing about that distinction. We have constructed a financial system in which borrowing hundreds of thousands of pounds to purchase an existing house is entirely normal, while borrowing the same amount to invest in an income-producing business would be regarded as extraordinarily risky.

It raises a question that I think deserves considerably more attention than it receives: has Britain’s obsession with residential property, and our apparent determination to keep making it more expensive, contributed to the country’s wider economic problems?

Britain Has Become Enormously Wealthy on Paper

The scale of Britain’s property wealth is quite extraordinary.

According to the Office for National Statistics (https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/thenationalbalancesheetandcapitalstockspreliminaryestimatesuk/2026), the total estimated value of land in the United Kingdom increased from approximately £1.11 trillion in 1995 to £6.87 trillion in 2025. That is an increase of £5.76 trillion over 30 years, or more than six times its original nominal value.

To put that into perspective, the UK’s entire national net worth increased from approximately £2.69 trillion to £13.31 trillion over the same period. The increase in the value of land alone was therefore equivalent to more than half of the increase in Britain’s measured national wealth.

These figures are not adjusted for inflation, and I certainly wouldn’t suggest that half of Britain’s economic growth has come from rising land values, because economic output and the market value of assets are two very different things. Nevertheless, they demonstrate just how much of Britain’s accumulated wealth is now represented by the value of the land we already possess.

The distinction between land and buildings is important. When somebody constructs a new house, something useful has been created. There is another home in which people can live, just as building a new factory creates additional capacity to manufacture goods. But if the land beneath an existing house increases in value by £200,000 because the surrounding area has become more desirable, no additional accommodation has been created.

Indeed, the house itself might be exactly the same as it was 30 years ago, with the same three bedrooms, one bathroom and a garden that still needs mowing every fortnight. The only meaningful difference is that somebody else must now pay considerably more to own it.

The consequences for household wealth are substantial. The ONS estimates that land accounted for roughly one-fifth of aggregate household net worth in 1995, compared with more than two-fifths by 2025.

Of course, British households also hold considerable wealth in pensions, savings and other financial assets, and many pension funds invest heavily in shares. But property has become an enormous component of our collective balance sheet, and one that is not particularly easy for an individual homeowner to access.

Someone living in a £1 million mortgage free house with £50,000 in savings might technically be a millionaire, but the property does not pay dividends, cannot easily be sold in small pieces and does nothing to improve their monthly income merely because its market value increases.

They are wealthy, but much of that wealth is locked into the thing they need to live in.

Has Housing Swallowed Up Our Economic Progress?

One of Rory Sutherland’s more interesting observations is that technological progress has made an extraordinary range of products better and cheaper, while housing has moved in precisely the opposite direction.

Consider what a relatively ordinary television, computer or mobile telephone can do today compared with the equivalent product 30 years ago. In many cases, technological development has delivered vastly superior products at prices that would once have seemed unimaginable.

Housing is different.

Sutherland offers a wonderful illustration of this in another Spectator article (https://spectator.com/article/louis-xiv-would-envy-your-life/). Imagine transporting Louis XIV, the fabulously wealthy French king, into the home of an ordinary British family today. He would be astonished by almost everything he encountered. The television, the refrigerator, the flushing toilet, the central heating and the extraordinary range of food available would all represent luxuries beyond anything that even the enormous wealth of Versailles could have purchased. The same would be true of modern cars, medicines and countless other things that we now take entirely for granted.

But there is one thing that Sutherland suggests the king might be rather less impressed by: the house itself. Someone working in a highly paid job in London’s financial or legal industries might devote an enormous proportion of their lifetime earnings to purchasing a three-bedroom Victorian terrace in Fulham, the sort of property that might have been occupied by a postman or railway clerk a century earlier.

Of course, the modern property will have central heating, better plumbing, internet access and numerous other improvements, while the postman of 1924 may well have been renting rather than owning. Nevertheless, there is something extraordinary about the comparison. We enjoy products and services that would have astonished the wealthiest individuals in history, yet a successful professional today might spend decades paying for a house that is not fundamentally different from one occupied by a relatively ordinary family 100 years ago.

According to the ONS, the median house in England cost approximately 3.5 times median annual full-time earnings in 1997. By 2025, that figure had increased to 7.6 times earnings, although it had fallen from a peak in 2021.

It might be reasonable to expect a more expensive home to be a better home, but there is little evidence that the quality or size of British housing has improved sufficiently to explain anything approaching this increase.

A 2024 Resolution Foundation report(https://www.resolutionfoundation.org/publications/housing-outlook-q1-2024/) found that housing services accounted for approximately 22% of total household consumption in the UK, compared with an OECD average of 17%. Yet British homes are generally smaller than those in many comparable developed economies, with less residential floor space available per person.

In other words, British households spend a relatively large proportion of their resources on housing without necessarily enjoying particularly large or impressive homes in return.

The Resolution Foundation also examined how much rising housing costs had absorbed improvements in household incomes. Its 2016 report, ‘The Housing Headwind’ (https://www.resolutionfoundation.org/publications/the-housing-headwind-the-impact-of-rising-housing-costs-on-uk-living-standards/), found that between 2002–03 and 2015, average real weekly incomes among working-age households increased by £32, while real weekly housing costs increased by £21.

That meant approximately two-thirds of the improvement in income was absorbed by higher housing costs.

For households headed by someone aged between 25 and 44, the picture was even worse. Their real weekly incomes increased by an average of £12, while their housing costs rose by £25.

It is worth emphasising that these figures relate to a particular historical period, and housing affordability has improved somewhat in recent years as earnings have grown faster than house prices. Existing homeowners also benefited considerably from the exceptionally low mortgage interest rates that prevailed for much of the 2010s.

Nevertheless, the longer-term problem is difficult to ignore.

I also find the changing nature of household employment particularly interesting. In 1975, approximately half of couples with children had both parents in employment. By 2015, that had increased to more than two-thirds.

This represented an enormous improvement in economic opportunities, particularly for women, and increased the amount of income available to many families. But in a housing market where the supply of desirable properties cannot easily increase, some of that additional purchasing power can be absorbed into higher house prices.

A couple who once relied on one salary could now potentially purchase a considerably more expensive home using two. Yet if most of the other couples competing for the same properties also had two salaries, the advantage could quickly disappear as prices adjusted.

What should have been a substantial improvement in purchasing power can therefore become an increasingly expensive bidding competition for essentially the same houses.

Are Rising House Prices Damaging Britain’s Productivity?

This brings me to what I suspect may be one of the more damaging economic consequences of Britain’s housing obsession.

A household that has committed most of its financial resources to purchasing an expensive home has less accessible capital available for other purposes, including investing in shares, starting a business, acquiring income-producing assets or simply spending frivolously (money that goes straight back into the economy in some way).

This does not mean that buying a house removes money from the economy. The seller receives the proceeds and might use them to invest elsewhere, while the property itself provides a valuable service by accommodating its occupants.

But it does raise questions about how the financial system allocates capital, and whether we have created incentives to acquire existing assets rather than finance the creation of new ones.

In May 2026, economists Jalal Siddiki and Zilong Wang published a particularly interesting study in the Journal of Regional Science (https://onlinelibrary.wiley.com/doi/full/10.1111/jors.70069), examining bank lending across 304 UK local authorities between 2014 and 2021.

They found that rising house prices were associated with reduced lending to small and medium-sized businesses, while mortgage lending increased. Businesses that owned substantial land or buildings were relatively protected from this effect, presumably because their property provided valuable security against which they could borrow.

The researchers’ conclusion was that strong housing markets can divert bank lending away from smaller businesses and towards residential mortgages.

That strikes me as a potentially serious problem.

Consider two possible uses for £500,000 of bank lending. In the first, the money helps somebody purchase an existing house. In the second, it finances a business acquiring machinery, developing a new product or expanding its operations.

The first transaction may be entirely sensible and economically beneficial, but it does not itself result in an additional house being built. The second has the potential to create additional productive capacity, employment and income.

Naturally, not every business investment succeeds, and lending against property offers banks an attractive form of security. Nor does the research establish that Britain’s housing market is responsible for the country’s disappointing productivity growth.

But Britain has struggled with weak productive investment for many years, and I find it difficult to dismiss the possibility that our preference for lending against existing property is part of the explanation.

There is also a cultural element to this. Someone who purchases a house for £400,000 and sells it 20 years later for £800,000 may regard themselves as having made an excellent investment, even though inflation, maintenance costs, mortgage interest and the returns available from alternative investments all need to be considered before reaching that conclusion.

Meanwhile, an entrepreneur who invests £400,000 in a business, employs people and develops something genuinely useful might ultimately achieve a considerably worse financial return.

That is not an inevitable outcome, but it is worth questioning whether the incentives in the British economy encourage the activities we should most want to see.

What Can Britain Learn from America?

One particularly interesting comparison is with the United States, where household wealth is held in a substantially different way.

According to the Office for National Statistics, approximately 60% of British household net worth in 2025 was represented by non-financial assets, predominantly land and buildings. In America, the equivalent figure was closer to one-third, although differences in national accounting methods mean the figures are not perfectly comparable.

The contrast becomes even more striking when looking at American investments. According to the Federal Reserve’s September 2026 Financial Accounts(https://www.federalreserve.gov/releases/z1/current/recent_developments.htm), American households and non-profit organisations held approximately $74 trillion in corporate equities, either directly or indirectly through investment vehicles and pension arrangements, at the end of June 2026. That compares with approximately $49.8 trillion in owner-occupied residential real estate.

In other words, Americans collectively held considerably more wealth in shares than in their homes.

Of course, this does not mean that the average American has a substantial share portfolio. Financial wealth is highly concentrated among richer households, while American homeowners have also benefited enormously from rising property prices. British households, meanwhile, own substantial financial assets through their pensions.

Nevertheless, I think the comparison raises an interesting question about how Britain accumulates wealth. In America, the growth of successful businesses and the stock market plays an enormous role in increasing household wealth. In Britain, the appreciation of residential property has become a particularly important component of that process.

There is another interesting difference between the two countries, which James Kanagasooriam explored in an August 2026 article for The Times(https://www.thetimes.com/comment/columnists/article/britain-problem-wealth-creation-v3wqjsh76).

Kanagasooriam suggested that if he attended a regional Walmart summer barbecue in America, the store manager, a number of supervisors and some regional office employees might well be millionaires, thanks to higher American salaries and the growth of their pensions and investments. An equivalent gathering of Tesco employees in Britain, he argued, would be considerably less likely to contain so many wealthy individuals.

I find this a particularly interesting comparison because we’re not talking about investment bankers, technology entrepreneurs or senior executives of enormous companies. We’re talking about people working in fairly ordinary jobs.

It is an illustration rather than a statistical survey, but the underlying differences in remuneration are worth examining.

In 2024, Walmart announced that the average base salary for its US store managers would increase to approximately $128,000, with annual bonuses potentially reaching 200% of base salary for those meeting all their targets. It also introduced annual stock grants worth up to $20,000.

Someone spending several decades earning a substantial salary and accumulating shares in their employer could conceivably build considerable wealth without depending upon the appreciation of residential property.

Tesco also operates employee share schemes, and in March 2026 announced that more than 22,000 colleagues would share in a £134 million windfall through its Save as You Earn arrangements. It would therefore be wrong to suggest that British retail employees have no opportunity to participate in the financial success of their employers.

But the differences in earnings and accumulated financial wealth remain interesting, particularly when considered alongside the relative size of the two countries’ stock markets.

There is also a more straightforward comparison worth making.

According to Nationwide, the average UK house cost approximately £53,394 in 1996. By December 2025, that figure had increased to approximately £271,000.

An impressive (inflation busting) return, certainly, but consider what might have happened to the same money had it been invested in the American stock market.

If you had invested £53,394 in the S&P 500 at the end of 1996, how much would your portfolio have been worth at the end of 2025, assuming all dividends were reinvested (but ignoring any tax and investment fee implications)?

£250,000? £400,000? Perhaps £600,000?

No.

Try approximately £1.06 million.

That is not a typo.

Of course, this isn’t a completely fair comparison. Owning a house provides somewhere to live, avoiding the cost of renting. A mortgage also allows someone to purchase a property worth substantially more than their initial deposit, while maintenance costs, mortgage interest and transaction expenses affect the overall financial return. Investing in shares also involves risk, and the S&P 500’s historical performance is no guarantee of future returns.

Nevertheless, it does suggest that if you bought a house in 1996 you would be better off today if you’d spent, say, 20% less on your house, and put that 20% monthly mortgage payment saving into an S&P 500 tracker fund.

This illustrates something often forgotten when people boast about how much their homes have increased in value: the opportunity cost of tying up enormous amounts of capital in residential property.

There is an old saying that you can never lose with property. You certainly can when opportunity costs are considered.

Perhaps Britain would benefit from regarding investment in productive businesses as an equally normal way of building long-term financial security.

Did Help to Buy Increase House Prices and Housebuilders’ Profits?

Perhaps the strangest feature of Britain’s housing market is the way governments have repeatedly responded to increasingly expensive houses.

The economics of supply and demand suggest that one way to improve housing affordability is to increase the number of homes available, particularly in locations where people most want to live. Yet governments have frequently tried to address the problem by increasing the amount of money that prospective purchasers can access.

Rather than concentrating exclusively on making housing less expensive, successive governments have introduced schemes designed to make it easier for purchasers to obtain the money required to pay prevailing prices.

Help to Buy, shared ownership, government-backed low-deposit mortgages and more generous mortgage lending arrangements, including larger loans and longer repayment terms, all seek in different ways to increase the purchasing power available to prospective homeowners.

There is a particularly timely reason to revisit this question. In September 2026, the government announced plans for a new scheme called Your First Home, offering first-time buyers government-backed equity loans of up to 20% towards newly built properties, potentially allowing them to purchase with a deposit of just 2.5%. The details are still to be finalised, but it is remarkable how similar the underlying approach is to the Help to Buy scheme introduced thirteen years earlier. We are once again proposing to make houses more affordable by helping people finance their purchase, rather than directly reducing their price.

Individually, these schemes can provide considerable assistance. Someone who has struggled to accumulate a deposit may be able to purchase a home years earlier than would otherwise have been possible.

But what happens if everyone competing for the same limited number of houses can suddenly afford to borrow more?

If there are 100 houses available and 150 prospective buyers, increasing the amount that those buyers can borrow doesn’t automatically create any additional houses. Instead, it can simply allow the buyers to bid more against one another.

In June 2025, Bank of England researchers Jamie Waddell and Danny Walker published an analysis of mortgage lending and homeownership(https://bankunderground.co.uk/2025/06/05/more-mortgage-lending-might-push-home-ownership-further-out-of-reach/) that provides evidence of this phenomenon.

Examining data between 2005 and 2020, they estimated that a 1% increase in mortgage credit supply could increase house prices by as much as 0.6%, with the effect peaking after approximately one or two years.

Perhaps more remarkably, they found no discernible corresponding increase in the overall homeownership rate.

In other words, making more mortgage credit available tended to increase the price of houses without necessarily increasing the proportion of people that owned one.

This is not to say that targeted mortgage assistance cannot help first-time buyers. The researchers acknowledged evidence that some schemes specifically directed towards low-deposit borrowers can increase homeownership, even where they also increase prices.

But the distinction between helping an individual purchase a home and making homeownership more accessible across the population is crucial.

The government’s own evaluation of Help to Buy, published in September 2026, is similarly revealing.

The scheme, which operated between 2013 and 2023, provided government equity loans to help purchasers buy newly built properties. According to the evaluation(https://www.gov.uk/government/publications/evaluation-of-the-help-to-buy-scheme/evaluation-of-the-help-to-buy-scheme-evaluation-findings-report), 54% of surveyed customers said that they could have purchased a home without Help to Buy, although many used the assistance to purchase a larger or more desirable property.

There is something rather strange about using public resources to help people purchase homes that they could already afford. In some cases, the government’s contribution was not the difference between someone becoming a homeowner and remaining a renter, but potentially the difference between purchasing a three-bedroom house and a four-bedroom house.

Of course, the government wasn’t simply giving money away. It was advancing equity loans, which were repayable and whose value moved with the price of the property. Nevertheless, I think it is reasonable to question whether using a portion of the income tax paid by someone earning minimum wage to help help a middle-class household purchase a more expensive property was an efficient use of public resources, particularly when some of the additional purchasing power could be reflected in higher house prices.

The evaluation found that Help to Buy purchasers paid approximately 1% more than buyers of otherwise comparable new-build properties that were not purchased through the scheme. It also identified price increases in some local housing markets, particularly less affordable ones.

A particularly revealing account came from property developer James Gerrard, speaking on ‘The Money Gains Podcast’ in October 2025. Discussing the construction and sale of flats in East London following the introduction of Help to Buy, he explained how the scheme influenced his company’s approach to pricing.

According to Gerrard, a flat priced at £500,000 would require a buyer to provide a £25,000 deposit, while a flat priced at £600,000 would require only another £5,000 upfront, assuming a 5% deposit.

He described his company’s approach in remarkably straightforward terms:

“Any flat we sold was 600,000 pounds.”

And then:

“So we’re gonna sell everything for 600k.”

Gerrard’s account does not prove that particular properties were increased in price from £500,000 to £600,000, nor does it establish the scale of price inflation caused by the scheme as a whole. Nevertheless, it is an interesting illustration of how a developer could respond to government assistance designed to increase purchasing power.

It wasn’t just property developers describing how Help to Buy influenced their pricing decisions. Some of Britain’s largest housebuilders enjoyed an extraordinary increase in profitability during the scheme’s lifetime.

Take Persimmon. In 2012, the year before Help to Buy was introduced, the company generated approximately £22,500 in operating profit for every house it sold. By 2018, that figure had increased to more than £66,000, with almost half its sales made through Help to Buy. Its operating profit margin had also increased from approximately 13% to more than 30%.

Metric	2012 (Before Help to Buy)	2013 (Launch Year)	2018
Homes sold	9,903	11,528	16,449
Operating profit per home	£22,500	£28,900	£66,382
Operating profit margin	12.9%	16%	30.8%

Naturally, not all of this improvement can be attributed to Help to Buy. The housing market was recovering from the financial crisis, while Persimmon benefited from lower land costs and greater operating efficiencies. However, the government’s own September 2026 evaluation found that developers participating in Help to Buy increased their profit margins more rapidly than otherwise comparable developers who did not participate, with statistically significant results among small and medium-sized housebuilders.

In other words, there is evidence that a scheme intended to help people afford increasingly expensive houses also helped make the companies selling those houses considerably more profitable.

It is important to recognise, however, that Help to Buy also increased construction. The government’s evaluation estimated that approximately 15% of new homes built in England during the scheme’s lifetime were additional homes attributable to the programme, while identifying benefits for some first-time buyers.

This is an important qualification, because assistance to buyers can encourage construction where developers are able to respond to increased demand.

The problem is particularly acute in places where additional homes cannot easily be built. There, extra purchasing power is more likely to be reflected in higher prices rather than additional supply.

Governments have, of course, also pursued planning reforms and policies intended to increase housebuilding. It would be unfair to pretend that their response to unaffordability has consisted entirely of financial assistance.

There is also an interesting historical irony here. Until the reforms introduced following the 2009 expenses scandal, MPs could claim the interest on mortgages used to purchase eligible second homes. In 2008–09, an MP earning a basic salary of £63,291 could claim up to £24,006 annually towards eligible second-home expenses, including mortgage interest. Taxpayers were therefore potentially subsidising the borrowing costs of properties whose subsequent increases in value would benefit the MPs personally.

The arrangement was so peculiar that Sir Christopher Kelly’s 2009 review of parliamentary expenses quoted one MP as observing: “We made MPs (some MPs) into property speculators.” I wouldn’t suggest that MPs deliberately supported policies designed to inflate house prices for their own financial benefit, but I find it remarkable that our parliamentary expenses system once helped some politicians acquire appreciating property assets with publicly funded support for their borrowing costs.

Nevertheless, I find it difficult to escape the contradiction at the centre of so much housing policy: we identify that houses have become too expensive, and then attempt to solve the problem by helping people pay more for them.

The Bank of Mum and Dad and Britain’s Inheritocracy

There is another consequence of rising house prices that I think is particularly concerning: the extent to which the ability to purchase a home increasingly depends upon the financial circumstances of one’s parents.

Historian Eliza Filby explores this in her book ‘Inheritocracy: It’s Time to Talk About the Bank of Mum and Dad’, arguing that Britain has become a society in which inherited wealth and parental financial support play an increasingly important role in determining economic opportunity.

Consider two people in their late twenties. Both earn £40,000, have similar qualifications and have managed to save £25,000 towards purchasing their first home.

One has parents who can provide another £75,000. The other does not.

Despite having achieved almost identical things professionally and financially, they are suddenly in very different positions. The first can potentially purchase a property immediately, while the second may need to continue renting and saving, perhaps for many years.

The scale of this assistance is considerable.

In December 2023, the Institute for Fiscal Studies(https://ifs.org.uk/publications/help-housing-ladder-role-intergenerational-transfers) reported that almost half of first-time buyers in their twenties received financial help in its 2018–20 data, predominantly from their parents. Among those receiving assistance, the average contribution was approximately £25,000.

For many prospective buyers, the limiting factor was the deposit rather than their ability to meet monthly mortgage repayments. The IFS calculated that, where a 10% deposit was the binding constraint, an additional £1,000 from parents could potentially increase the value of the property someone could purchase by £10,000, provided sufficient mortgage finance was available.

The importance of parental wealth is therefore not limited to providing a few thousand pounds towards the purchase. It can materially alter someone’s purchasing power.

Filby provides a particularly striking personal example in a 2025 article about London’s inheritocracy(https://www.standard.co.uk/homesandproperty/property-news/how-london-became-an-inheritocracy-b1213461.html). Her mother purchased a five-bedroom house in Tooting for £28,000 in the 1980s, a property that subsequently appreciated to more than £1 million. Filby benefited from living in the property and eventually purchasing it herself, opportunities that would have been difficult to replicate through her earnings alone.

This illustrates how the extraordinary increases in property values enjoyed by one generation can become a source of financial advantage for the next.

Rory Sutherland makes a similar point, although rather less delicately. He recalled receiving job applications from young people whose parents lived in six-bedroom houses in Beaconsfield, and being tempted to reply: “Why don’t you just go and smoke dope on a beach in Bali and wait for your parents to die?” He hastened to add that he never actually sent such a response.

It is an outrageous suggestion, of course, but there is a serious point behind the joke. Someone whose parents purchased a substantial house in an affluent part of the country several decades ago might eventually inherit more money than they could realistically hope to accumulate through an entire working career. In those circumstances, the financial rewards of studying hard, working long hours and climbing the corporate ladder can look rather less impressive when compared with the rewards of having wealthy parents.

And the consequences extend beyond homeownership.

A young professional whose parents can provide financial assistance may be able to accept an interesting but relatively poorly paid job in London, knowing that accommodation or other expenses can be subsidised. Someone without that financial support may have no realistic choice but to pursue a different opportunity elsewhere.

Research published by the IFS in January 2026 found that the house-price boom of the 1990s and 2000s increased the extent to which housing wealth advantages persist across generations, partly because the children of wealthier parents were better able to move to and purchase property in London.

This creates an uncomfortable possibility: that access to some of Britain’s most productive labour markets is becoming increasingly dependent upon family wealth rather than individual ability.

The Bank of Mum and Dad is not entirely different from the government assistance schemes discussed earlier. Both increase the purchasing power available to certain buyers, although one is funded privately and available only to families with sufficient resources.

If you wanted to assess someone’s economic circumstances, rather than asking “what do you do for a living?”, you might be better off asking “where did your parents buy a house in 1990?”

The result is that yesterday’s house-price appreciation can become tomorrow’s inequality of opportunity.

What Happens to All This Housing Wealth?

There is a final complication in Britain’s reliance on property wealth: much of it can be surprisingly difficult to access.

The 2024–25 English Housing Survey(https://www.gov.uk/government/statistics/english-housing-survey-2024-to-2025-age-cohorts/english-housing-survey-2024-to-2025-age-cohorts) found that approximately 4.3 million households headed by someone aged 65 or over had at least two spare bedrooms, representing 58% of households in that age group.

This does not mean those households are doing anything wrong. People may want space for visiting family members, hobbies or other perfectly reasonable purposes, and there are obvious emotional and practical reasons for remaining in a family home.

But it does illustrate how the housing stock and household wealth can become concentrated in properties that are considerably larger than their occupants strictly require.

A retired couple might own a £900,000 family home outright and have relatively modest pension income. They could potentially release hundreds of thousands of pounds by moving to a smaller property, but doing so involves substantial transaction costs, including Stamp Duty, estate-agent fees, legal expenses and removal costs.

It might also mean leaving an area where they have lived for decades, particularly if there is a shortage of suitable smaller homes nearby.

Rory Sutherland has written about the psychological and practical barriers to downsizing, and I think there is something rather peculiar about a system that can make people exceptionally wealthy through property ownership while simultaneously making it inconvenient and expensive to use that wealth.

Nor is the problem limited to retirees. A working-age household whose mortgage consumes a large proportion of its monthly income may be accumulating equity but have little money left over to invest elsewhere.

Property wealth is valuable, but it is not the same thing as an accessible portfolio of savings and investments.

Would Britain Be Better Off If House Prices Stopped Rising?

Having considered all of this, I think it is worth asking a question that would once have seemed almost heretical in Britain: would we actually be better off if house prices stopped increasing?

I am not suggesting that a sudden collapse in the housing market would be desirable. Indeed, it could leave large numbers of households in an extremely difficult financial position, particularly those who purchased relatively recently with small deposits.

An article in The Guardian in August 2026(https://www.theguardian.com/money/2026/aug/08/flats-in-england-not-selling-slashed-prices-buyer) gave the example of a woman who had purchased a flat for £200,000, only for a recent attempted sale at £145,000 to fall through. She was struggling to sell the property despite wanting more space for her young daughter.

Consider someone in a similar position who purchased their flat with a small deposit and subsequently spent most of their disposable income on mortgage payments, council tax and service charges. They might have little in savings and very little equity remaining in the property. Even if they desperately needed a larger home to accommodate a growing family, they could find themselves unable to move without additional financial assistance.

Falling prices can also undermine confidence, make lenders less willing to provide mortgages and damage construction activity. A sudden housing crash could therefore cause considerable economic disruption.

But consider a very different scenario.

Suppose house prices remained broadly unchanged for the next 20 years, while wages, productivity and company profits continued to increase.

Homes would gradually become more affordable relative to earnings, without requiring nominal prices to fall. Younger households might be able to purchase properties with smaller mortgages relative to their incomes, leaving more money available for savings, pensions or other investments.

Meanwhile, existing homeowners would continue to enjoy the security and accommodation provided by their homes, even if they could no longer rely on substantial annual increases in their market values.

Such an outcome would not happen automatically. It would require housing supply to respond more effectively to demand, particularly in places where employment opportunities are strongest. It would also raise questions about planning, infrastructure, construction costs and the tax treatment of property.

There would be trade-offs. Developers need sufficient returns to build new homes, existing homeowners have legitimate financial interests, and changes to property taxation can have consequences that are not immediately obvious.

There is nothing inherently wrong with people becoming wealthier through homeownership. I certainly wouldn’t begrudge someone the financial security that comes from owning their house outright after decades of mortgage payments, and rising property values can provide genuine financial benefits.

But I think Britain has developed an unhealthy relationship with its housing market, treating increases in property values as though they were evidence of economic progress, even when nothing additional has been produced.

If every house in Britain doubled in value tomorrow, the country would appear considerably wealthier. We would not, however, have twice as many houses, twice as many factories or twice the productive capacity. Our wages would not suddenly double, our businesses would not become more competitive and younger generations would face considerably greater obstacles to purchasing somewhere to live.

Perhaps the question isn’t whether Britain’s houses are valuable enough, but whether we have spent too much time making existing assets more expensive and too little time creating new sources of prosperity.

I would rather live in a country where wages, productivity and business investment doubled over the next 20 years while house prices remained unchanged, than one where house prices doubled while the rest of the economy stood still.

Yet I suspect that, if the latter happened, we would still find plenty of newspaper headlines celebrating another successful year for the British housing market.