I was taught my first landlord and boss Abe Bacchus that it was best to have your own house but you needed savings and a pension too, I found this quote in a book of retirement quotes by Helen Burggraf
43 years after Abe taught me that , I found this article which explained why. It’s to be found on this link.
It’s by Mark Penwarden who tells us
I have spent a decade working as a solicitor in the City before starting The Penwarden Review in 2026.
I am very grateful to him and his nearly 6,ooo words!
Has Britain’s Obsession with House Prices Made Us Poorer?
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?
Thank you for the kind words!
The Microsoft references are rhetorically effective, but analytically misleading.
Microsoft went public in 1986 and did not pay a dividend until 2003. Its first dividend was only 8 cents per share annually, and its value to shareholders comes overwhelmingly from retained earnings, reinvestment, and expected future cash flows, not its dividend payments.
A house on the other hand is not economically sterile: it produces a valuable service, accommodation, every year. Owner-occupiers effectively consume that service rather than paying market rent to someone else.
Mark’s essay acknowledges this in passing, but does not integrate it into its valuation comparisons.
Mark’s core intuition is correct: Britain seems to have become too accustomed to treating rising property values as national success. Paper wealth in existing homes is not the same as new homes, productive capital, higher wages or other opportunities.
But Mark’s rhetoric sometimes outruns its evidence.
The Microsoft example inadvertently undermines a simplistic “shares yield income, houses do not” framing. The S&P (or, better still, a global
index) comparison is not a fair personal counterfactual for living year-by-year through the past thirty years, with market bubbles after 1999, again by 2008, then Covid in 2020, and arguably another equity bubble is heading our way today.
The references to Help to Buy schemes (smaller versions have operated and in some respects continue to operate in Northern Ireland, Scotland and Wales), on the other hand again, do establish plausible mechanisms for me, but are not proven as national-scale causation.
The article could be more persuasive for me if it replaced “housing made Britain poorer” with the far more defensible claim that Britain’s housing settlement has channelled too much household wealth, credit and policy effort into scarcity rents rather than towards productive investments and greater housing supply.