If car prices rise too steeply, a prospective buyer has the choice of spending less and buying secondhand. But houses are not cars. Not only do older houses not depreciate in value but their selling price is affected by the general housing market. If new houses cost more, then so do old houses, even though they were built years before, with less expensive labor, less expensive materials, and cheap money. Hence the higher the cost of new housing the more difficult it is to become a homeowner, and the more beneficial it is to be one already.
Expensive housing means that a few people lose but a lot of people gain.
Theoretically, prices should eventually drop as a result of reduced demand. However, unlike car prices, over time house prices have so far proved remarkably resistant to declines in demand. Many homeowners who are selling a house prefer to wait rather than reduce their asking price significantly. The nature of the homebuilding industry is also a factor. Large merchant builders have diversified into related fields such as property development and commercial and industrial building.