For most people, the largest purchase that they are ever likely to make in their lives will be a home purchase. In almost all countries where free-market forces are allowed to predominate, house prices have risen at a faster rate than wages since World War II. However, political and social pressures have come to bear which mean that more people than ever before aspire to own their own homes.
The only way for the average person to be able to buy a home when house price inflation outstrips wage inflation is to enable them to borrow more money against their earnings and/or to increase the repayment period on the loan. Schemes now exist where borrowers only pay the interest component of their loan (i.e. the capital is never repaid and so the “buyer” never owns the property) and of course the whole sub-prime fiasco was about making loans to people ill-placed to afford them.
Demand drives prices and there is a wide-spread belief that “bricks and mortar” is the safest investment that there is – however this is not quite true. Demand is