The Unattainable Dream - How Britain’s Housing Obsession Broke a Generation

Over the last forty years, policy, power, and propaganda have transformed Britain’s dream of homeownership into a national obsession with property, turning the housing dream into an illusion.

Over the last four decades, the UK has witnessed housing transform from a basic necessity into a speculative financial asset. It is no longer enough for a home to just be a place to live, it must now function as a primary store of wealth, acting as an investment, a pension, and a major source of inheritance for the next generation. Homeownership has morphed into a national obsession, fuelled by a combination of policy decisions and market dynamics, with house prices decoupling from wages, leaving large swathes of the population facing insecure or unaffordable housing.

The seeds of this transformation were sown in the 1980s, an era of free-market enthusiasm when Margaret Thatcher’s government championed a ‘property-owning democracy’, and the average home cost roughly four times the average annual income, a level deemed broadly affordable by historical standards. The signature policy, Right to Buy, encouraged millions of council tenants to purchase their homes at generous discounts, and national home ownership rates surged, driving a new belief system that houses were not just places to live, but tickets to personal wealth. Adoption of this new housing ideology was catalysed by significant financial deregulation, as the so-called ‘Big Bang’ of 1986 in the City of London unleashed global capital flows and a credit boom.

While previous generations had cautiously opted for modest loans, banks and building societies were now eagerly competing to extend larger mortgages, with new buyers finding lenders willing to stretch borrowing multiples far higher. It was this access to easy credit and the allure of ever-rising property prices that ignited a series of housing booms that peaked in the late 1980s. Yet, a sharp interest rate spike in 1989 sent the market into a tailspin, with many homeowners who had believed property values could only go up now introduced to a harsh reality of negative equity and repossessions, which swept across pockets of the country in the years following.

However, this harsh period didn’t last long, and from the late 1990s onwards, Britain entered another unprecedented housing bull market. A combination of low inflation and interest rates, a growing population, and global wealth pouring into London created the perfect environment for property values to soar to new heights. Once again, homeownership became a driving tenet in the lives of many, with ordinary families treating homes as a one-way bet on future wealth and prosperity, stretching finances in the hope of buying before being priced out forever. Many existing homeowners became amateur landlords, snapping up buy-to-let properties via interest-only loans, forming a new obsession with endlessly expanding their property holdings.

Policymakers often cheered this housing boom as a sign of prosperity, with rising home prices making consumers feel wealthier, which in turn increased confidence and spending. Chancellors basked in the glow of this wealth effect, and politicians dined out on the societal pride of Britain’s high homeownership rates and frothy property values, helpfully reinforced by countless media stories of booming house prices and a new dawn of homeownership. But beneath the surface of apparent economic success, fissures were forming in the foundation, and a generational divide had erupted. Between 1997 and 2017, average house prices in England rose by 173% in real terms, while real incomes of younger adults grew by only 19%. With property values far outpacing this modest growth in earnings, home ownership among young adults collapsed, and by 2017, just 35% of 25 to 34-year-olds owned a home. At the same time, the price-to-income ratio had more than doubled, with recent data showing that UK house prices averaged around nine times annual earnings, resulting in today’s homebuyers facing the toughest affordability on record.

The sharp rise in house prices over the previous forty years has overwhelmingly benefited a small subset of the population, with many missing out on this great wealth transfer. By and large, housing wealth has been transferred from the young to the old, from renters to owners, and from the less affluent regions to the booming cities, leading to an ever-growing national divide. This has been starkly uneven across the UK, with London and the South East experiencing explosive growth, driven by international investors snapping up swathes of prime postcodes and local buyers being forced into bidding wars for the remaining supply. Meanwhile, former industrial towns in the North or coastal communities saw much slower appreciation, yet widespread homeownership still remained elusive, with lower local wages hampering affordability. The consequence of this has been dire, resulting in a nation of housing haves and have-nots, often separated by age and region.

The current housing crisis is as much an issue of supply and demand as it is an ideological flaw that needs to be overcome, after many decades of misguided political and economic policy initiatives. The transformation of property into a new vehicle that would lead to prosperity for all has meant that millions now believe that house prices must rise forever, and government policy obediently protects that belief. There is a vested interest in the status quo of rising prices, and no politician wants to be seen as contributing to a house price crash or eroding the value of people’s main assets, for fear of the national outrage that would follow.

This is why shifting public perception will be crucial in ensuring that policy can begin to address the foundational issues of the crisis, rather than pandering to those helping to facilitate this asset inflation. A government serious about change will need to stop speaking of housing ladders and the need for young people to become another cog in a flawed machine, but instead, they must start talking about homes as infrastructure that is accessible to all. There needs to be a renewed focus on government-backed development projects that treat housing as no different to other key infrastructure like education, healthcare, or even roads. Without affordable, high-quality housing, policies focused on productivity increases and economic growth will continue to fall flat, or worse, further widen the lifestyle gap for the most vulnerable in society.

In addition to any government-backed schemes, this will of course also require more building from the private sector too, as the UK simply hasn’t built enough homes in the places people want to live, with construction constrained by restrictive planning laws and local opposition. However, this must be done with sensitivity and should embrace innovative planning solutions that maximise potential occupancy, without detracting from existing developments, helping to avoid NIMBYism. Furthermore, a hard look at the tax and regulatory regime will be necessary to curb pure speculation in the housing market, with higher taxes on empty properties helping to disincentivise leaving homes vacant as pure investments, rather than turning them into productive assets. There should also be consideration of a temporary ban or elevated taxes on foreign buyers in the housing market, aiming to prevent external wealth from driving out locals, as homes should not be treated as just another asset class for overseas investors to park money.

The UK’s housing story is at a crossroads, and the country needs a new narrative that does not require the majority of the population relying upon perpetual house‑price increases to fulfil their dream of future prosperity. There is a growing public appetite for change, yet year after year, this has been ignored due to a fear of repeating past housing market collapses and seeing the hypothetical wealth of a proportion of the population being eroded. We need to gradually unwind the damaging housing commodification that has swallowed our economy over the last forty years, and this will require a willingness among Britons to see a home as more than just an asset on a balance sheet. Re-aligning housing with the fundamentals of incomes and needs of society, rather than speculation and credit availability, will be essential to ensuring that having a roof over your head becomes a given, and not a gamble.