Elton John sang that he didn’t have much money, but boy if he did, he’d buy a big house where they both could live. That probably goes for most of us. If you received a windfall, what would you do? It’s the simplest and most powerful expression of a basic human desire – to own something of your own. A home. A space. A future.

Ownership is more than possession. It’s psychological security. It’s social identity. Whether it’s a house, a car, or just a record collection, ownership grounds us. It makes us feel permanent in a world that keeps shifting. Even systems that rejected private ownership, like communism, struggled with this basic human need. People want something to care for – and something that cares back.

With housing, that feeling is amplified. Behavioural psychologists link homeownership to better sleep, stronger communities, and the ability to plan ahead. When people know they won’t be moved on with 60 days’ notice, they think differently. They invest in their neighbourhood, not just their living room. Yet for many young people in Britain, ownership still feels elusive. And surprisingly, it is not just about price. Yes, homes are expensive. But in real terms, adjusted for inflation, house prices have barely moved in a decade. What has changed are the sludge factors. Sludge factors are the small persistent hurdles that make it harder for people to do things. Especially things that are good for them.

In housing, two sludge factors stand out. First, the UK’s shift from almost exclusively interest-only mortgages to now almost exclusively repayment mortgages. This means monthly payments are now around 40% higher for the same loan. Second, stamp duty. It used to be a flat 0.5% on all homes. Now it kicks in at 2% above £125,000 and rises steeply.

All those repayment mortgages have changed the shape of the housing market. We have been forced to over save. According to Savills, the loan-to-value ratio of UK privately owned housing, the amount a homeowner owes compared to the value of their home, is just 19.4%. That means over 80% of the country’s £9 trillion housing stock is mortgage-free. That mean s £7 trillion is just sitting quietly in bricks and mortar, not doing much. And it is growing, as we repay back monthly, every month. No wonder the UK economy feels stuck. That’s a lot of capital saved, but not moving. Yet this low leverage is not a weakness. It is a hidden strength.

The opportunity then is obvious. Unlocking those savings. Encouraging the older owners to move, and give the young a way in. Taxes such as huge stamp duty don’t help. Sure, it brings in billions to the exchequer, but it denies the coffers many more billions through decreasing activity and aspiration. And that aspiration to own is not going away. In fact, it’s one of the few cross-generational dreams we still share. Ownership drives productivity, wellbeing and, yes, GDP. It gives people pride and governments breathing room. No wonder financial shares have been on such a tear their core business may just be warming up.

So, for the UK housing market it looks like it may just be glass half full. With all those tied up savings you could say “It’s still standing”…perhaps…”better than it ever did”.

By Craig Harper, MVAM Managing Director.

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