For half a century the Western world has wrapped the act of buying a house in a shimmering cloak of prudence, prestige, and moral virtue. Politicians invoke it when they talk about “hard-working families,” banks idolise it in glossy brochures, and dinner-party small-talk still revolves around “getting on the ladder.” Yet the ladder looks increasingly like a drawbridge. Prices have sprinted far ahead of wages and—crucially—far ahead of the cheap credit that once made those prices bearable. We have entered the exit-liquidity phase of the cycle, where the story of ownership entices the last round of buyers to take the risk off the hands of those who got in earlier.
The Illusion of Attainability
Take the United States. Since the start of 2012 the national Case-Shiller index has climbed about 140 percent¹, while real median household income has managed barely a quarter of that rise¹. A median-priced home now costs roughly $431,000; qualifying for the typical mortgage demands an income north of $110,000—a level only one household in five can claim¹. In Canada the gap is even wider. Nominal prices have trebled—about 270 percent—since the turn of the millennium², and the country’s household-debt-to-income ratio sits stubbornly near 180 percent, the highest in the G-7².
Across the Atlantic the arithmetic is no kinder. In Britain the average home sells for eight to nine times median earnings³; in London the multiple edges into the low teens³. Deposits frequently exceed £60,000—an impossible sum for anyone without parental help. Australia, once the archetype of quarter-acre affordability, has watched national prices rise almost fourfold since 1990⁴. Sydney’s median dwelling now changes hands for about A$1.2 million, while wages have crept up by little more than half that pace⁴.
Governments try to keep the dream breathing with first-time-buyer incentives, shared-ownership schemes, and eye-catching tax holidays. What they cannot disguise is the shrinking cohort of households that can buy without stretching loan-to-income ratios to the point of fragility—or tapping the Bank of Mum and Dad.
The Mismatch Beneath the Hype
Supply shortages are real, but the homes that do get built seldom match the wallets of the people shut out. In the United States, a post-pandemic construction boom took multifamily completions to a fifty-year high; roughly seven in ten of those apartments arrived in the top rent tier⁵. Canada’s own housing agency estimates the country will still be short 3.5 million affordable units by the end of the decade⁶. Britain trumpets a target of 300,000 new homes a year, yet social and genuinely affordable starts remain well below pre-austerity levels.
With ownership out of reach, renting has become the stop-gap—except the gap no longer stops anything. London’s average advertised rent for a one-bed flat pushed past £2,700 a month this spring⁷. A full-time worker on the city’s median salary takes home about £3,600⁷; three-quarters of that vanishes before the electricity meter even clicks on. Add £12,500 of stamp duty to buy a modest £500,000 flat⁷, nearly £2,000 of council tax each year⁷, and ever-rising service charges, and even the “lucky” buyer struggles to call the numbers sensible.
Manhattan paints the same picture in different currency. February set a fresh record with a $4,500 median monthly rent⁸. On the city’s $80,000 median household income⁸, that is 68 percent of gross pay—and it arrives six weeks before the IRS sends its annual reminder that gross is not net. Meanwhile, in Sydney, the median rent now hovers around A$775 a week⁹, draining roughly 45 percent of a median salary and still climbing⁹. Young households trying to save a deposit face a logical choke-point: the more they pay for shelter, the less they can save to escape it.
Resolution Foundation modelling suggests that in Britain only about one under-forty household in four could purchase a home today without family assistance¹⁰. Similar analyses in Canada and Australia point in the same direction. The cultural script still says buy, but the economic lines no longer scan.
A Fragile Foundation
Cheap money masked these tensions for a decade. That mask has slipped. America’s thirty-year fixed mortgage bottomed at 2.65 percent in January 2021, spiked to 7.79 percent in October 2023, and still sits near seven¹³. Canada’s variable rates moved from 1.5 percent to the sixes before retreating slightly after the first Bank of Canada rate cuts¹³; Britain’s two-year fixes have tracked a similar path, settling around five¹³. Each percentage-point jump trims roughly twelve percent from a borrower’s purchasing power, so today’s rates remove nearly half of the capacity that existed when prices last reset.
History offers uncomfortable precedents. The United States in 2006, Britain in 1989, Japan in 1990—each combined high valuations, high leverage, and rising rates, and each was followed by a painful correction. The current constellation is eerily similar, only with more debt and less demographic tailwind.
Beyond the Mirage
Housing has drifted from shelter to speculation by story. The reigning story insists that prices only go up, that renting is “dead money,” that any sacrifice is justified because—as the mantra goes—“they’re not making any more land.” Those lines now function less as wisdom and more as sales copy. The beneficiaries are the owners who captured the early gains; the exit liquidity is the cohort persuaded to buy the late-cycle high.
None of this guarantees a sudden crash; regional counter-examples still exist. Parts of the American Midwest, Atlantic Canada, or northern England look almost quaint in their affordability. But in the economic heartlands of the Anglosphere, the spread between perception and reality has reached a width where maths, not mood, will decide the next chapter. When the idea of ownership shines brighter than the lived experience, the market is no longer offering opportunity; it is transferring risk.
Sauces
¹ S&P CoreLogic Case-Shiller U.S. National Home Price Index, February 2025; U.S. Census Bureau, “Income in the United States: 2023.”
² Canadian Real Estate Association, MLS® HPI, April 2025; Statistics Canada Table 1110-0060.
³ Office for National Statistics, “Housing affordability in England and Wales 2023.”
⁴ Australian Bureau of Statistics, Residential Property Price Indexes Q4 2024; CoreLogic Hedonic Home Value Index, April 2025.
⁵ Harvard Joint Center for Housing Studies, State of the Nation’s Housing 2024, Figure 22.
⁶ Canada Mortgage and Housing Corporation, Canada’s Housing Supply Shortages, September 2023.
⁷ Rightmove Rental Price Tracker Q1 2025; ONS Annual Survey of Hours and Earnings 2024; HM Treasury, Stamp Duty Land Tax rates 2024-25; DLUHC, Council Tax Levels 2025-26.
⁸ Miller Samuel/Douglas Elliman, Manhattan Rental Report, February 2025; U.S. Census QuickFacts, New York City.
⁹ Domain Rent Report Q1 2025; Mozo, “Average Rent in Australia 2025.”
¹⁰ Resolution Foundation, Housing Hurdles, December 2024.
¹³ Freddie Mac, Primary Mortgage Market Survey April 2024; Bank of Canada, Policy Interest Rate 2024; Bank of England, Mortgage Statistics 2024.