mudguard:

 

I'm not sure who exactly you are talking about. Most homeowners generally own one property. Most the "profit" is a paper figure until it's sold.

 

the traditional path is to buy your first house, like you have, do it up or simply wait, sell it for a little bit of profit, buy somewhere else, sell that for a little bit more, ie climb the property ladder and then once you have enough money, build your own house. as you added a house to the market you help reduce demand and lower house prices.

but a lot of that stopped, as we can see from the records. instead of spending money on a new home they kept climbing the ladder making profit reinvesting into the house, then finally downsizing and cashing up all the profit. which of course is all tax free. as they didn't build a new home, demand goes up which increases prices so they made even more profit, so more did it, which leads us to today.

land prices is another issue. restrictions caused by RMA and even today the current big push from the same people thats been making the $$$, to use more land instead of going up which keeps land prices up (guess who owns the land). plus councils who push their costs onto developers who pass it on to the land price, so you end up with insanely high priced sections.

in my old home town there was subdivisions built in the 90's that had no houses built for 20+ years. 

decades ago word got around you could buy a ten acre block, list it as a farm and write your income tax off to it. so you paid no taxes but claimed all profit from the "farm" sale as capital gains and paid no tax on it. suddenly 10 acre blocks becomes really common. well untill ird clamped down on that practice but that loophole is still in use today.