I think that is only one thing of many. Brits have a fascination with owning property.
In many instances, renting is just as expensive as buying. Rental costs are broadly aligned with what mortgage repayments would be for a given property ; it would not make financial sense for a landlord to let a property for less than their mortgage repayments.
Home ownership is seen as the preferred tenure type in this country due to lack of regulation in the private rental sector, unscrupulous estate agents who charge exorbitant fees, relatively insecure tenure, and ultimately the fact that the rent you are paying is effectively paying off someone else's mortgage repayments.
In contrast, in countries like Germany, the rental market is somewhat different. Rents are far more reasonable in relation to wages, rent controls are in place (limit rent prices/increases), they have a more elastic housing supply thanks to a more liberal planning system, longer term tenancies, and institutional landlords (far preferable to renting from the shower of amateur "Mom & Pop" landlords we get in this country ).
Too many people on a small Island(ties in with lack of supply).
The argument about a lack of land is misguided at best. Less than 10% of the land mass of this country is actually developed, with
less than 3% of land actually built on.
We have an artificially induced supply side shortage, caused by an outdated and over restrictive planning system. The existing legislation was devised in an era when the state was building hundreds of thousands of council houses per year, and there was less reliance on private construction. This has seen little change since it's inception, bar the pretty much wholesale abolition of council house construction.
Although supply is a contributory factor to the housing affordability issue, it is the amount of credit and money being thrown at housing which has by far been the biggest contributor the current affordability crisis.
To list a few factors which have driven house prices to their current levels ; Introduction of Buy-to-Let mortgages (1996), Removal of House Prices from RPI (1997), Abolition of tax relief on share dividends (made final salary pensions unviable, 1997), deregulation of the banking sector (late 90s/early 2000s). Additionally, up until recently, housing benefit was setting a false floor the local rental markets, though this has been tacked by the current government.
The property markets did correct after 2007 or have people already forgotten that? In most of the country properties were something like 20-30% lower for a while, if you could find a buyer at all. IMO it's only the last few years property prices have recovered significantly.
The property market has not corrected properly. In order to do so, prices would have had to reduce by at least 50%, having increased by over 120% over the course of 1997-2007. Due to Quantitative Easing, dropping the base rate down to 0.5%, and various other financial instruments, this has not been the case.
Ideally, it would have been good if house prices could have declined very slowly or remained relatively static over the course of a decade or so. This would have allowed wages to catch up, without putting those who who had bought homes at boom prices into negative equity.
This was what was happening between 2010 and 2013, at which point the Conservative government cynically introduced Help to Buy. A scheme marketed as being designed to help First Time Buyers, whereas the true aim of the scheme has been to help everyone else at the cost of First Time Buyers . Further reading on this and what it truly aimed to set out can can be found in my post
here.
The government is currently reliant upon house price inflation to skew economic indicators in a favourable manner in what would otherwise be a stagnant economy. It increases money supply, and significantly the wealth of a significant proportion of the voting demographic, mainly older people, who are more likely to vote or release equity from their homes. It also positively impacts GDP; House prices and rents are both included in GDP. Even imputed rents for home owners (what a home owner would be paying in rent to live in their house) are included.
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