Property ladder
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The property ladder is a term widely used in the United Kingdom to describe an individual or family's lifetime progress from cheaper to more expensive housing. According to this metaphor, cheap houses for first-time buyers are at the bottom of the property ladder, and expensive houses are at the top. 'Getting on to the property ladder' is the process of buying one's first house, in the hope of leaving it for progressively better houses as one's salary rises.
In times of inflation, such as the last 30 years of the 20th century in the United Kingdom, salaries rose exponentially in nominal terms, even though the purchasing power of the salary may not have risen; but as the real cost of the fixed, or nearly-fixed, monthly loan repayment was eroded, the borrower was able to afford to take on a bigger loan to buy another, more expensive property. Over this period many people, by repeating this process several times, were able to acquire successively more expensive properties at comparatively modest real cost. The process was assisted by the low ancillary costs of house purchase, ease of borrowing, a favourable taxation system, a national culture of owner-occupation and a Government policy of obliging local councils to sell their housing stock to tenants at a discount.
With low wage inflation and the high {{citation}}: Empty citation (help) price of houses in the United Kingdom in the late 1990s and early 2000s, younger people had difficulty buying places to live. Under standard economic theory, this should have led to fall in demand and a cooling of prices; however, this did not happen for several reasons among them demographics, The entry of more investors into the market and rising prices leading to panic buying as purchasing decisions were brought forward.
Absent inappropriately low real interest rates, the cost of a mortgage should remain the same over the years. In the absence of career advancement, this erodes the concept of a property ladder, as there are no factors to erode the debt (other than slowly paying down the principal over time).
The term property ladder is also partly responsible for the artificial house price bubble in the UK as people generally are under the illusion that buying property was a safe business that does not require any deeper thoughts about whether it is a wise idea from an economical point of view. In fact, to many people in the UK the term of the property ladder could be used to describe a way "downwards". More and more people need to sell their property for less than they have initially bought it for and buy a smaller property. To them, the ladder leads to more and more debts while the size and value of the property is declining.
Some media such as the BBC have now internally banned the term "property ladder". [citation needed]