Property has therefore become more than an asset class. It increasingly acts as a sorting mechanism, rewarding timing, geography and family wealth as much as individual effort. Buying a first home now often depends as much on the balance sheet behind you as the one you have built yourself. This also helps explain why many younger adults are reaching traditional milestones later in life. Deposits take longer to accumulate, homeownership is delayed and family wealth often arrives only through inheritance decades after it would have been most useful. Receiving wealth at sixty may improve retirement. It does little to help someone buy their first home in their thirties. Much of what is remembered as exceptional financial judgement was also exceptional timing. Over the past forty years, falling interest rates steadily increased the value of housing. Research from the Bank of England suggests that much of the increase in house prices relative to incomes between the mid-1980s and 2018 can be explained by declining real interest rates. That does not diminish the discipline shown by homeowners who bought, repaid debt and stayed invested. But it does remind us that they were also supported by one of the most favourable monetary environments in modern history. Many bought before decades of falling borrowing costs had fully inflated property values. Today's buyers are often purchasing after those gains have already been priced in. They are not stepping onto the same ladder. They are buying it after much of the climb has already taken place. Ownership also changes incentives. Once a home becomes a household's largest asset, protecting its value becomes entirely rational. Homeowners understandably support good schools, safe neighbourhoods and stable communities. They also become more cautious about changes that might threaten property values. The result is a housing market shaped not only by economics but by politics, planning policy and the competing interests of existing owners and aspiring buyers. This is one reason housing policy remains so conflicted. Governments want homes to be affordable for first-time buyers while reassuring existing homeowners that the value of their largest asset will continue to rise. Those objectives frequently pull in opposite directions. Despite all of this, dismissing property as an investment would be a mistake. Its greatest strength has never been that it consistently outperforms every other asset. It is that it solves a behavioural problem. A repayment mortgage is, in effect, a long-term forced savings plan attached to an appreciating asset. Most people struggle to invest consistently in global markets through recessions, crashes and periods of uncertainty. Most people, however, continue paying their mortgage.
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