I dont see any way out of this scenario. Housing is an investment and suffering the highs and lows of being an investment, but actually it is shelter which is a necessity.
The necessity is the use of a property, not the ownership of it. Rent, then, works societally just as well. What causes the most unhapiness among the young is the loss of the capital gains they see owners accruing.
The over inflating and long boom has caused prices to be massively excessive without making people richer.
Some people get richer. My folks recently sold their pad and moved into rented housing. They've made out like bandits on capital appreciation over the decades. BTL landlords will one day bank the capital gains too.
How can regular people win?
I'm afraid that comes down to stumping up the purchase price to get on the ladder, then hanging onto it for dear life. Property moves in cycles - I had years of negative equity to get through - but over the longer term it is the main leveraged investment open to regular people (Try borrowing money to invest in emerging market equities!)
I'm the best contraindicator I know when it comes to property. Do the opposite of what I do and you'll do well. But even then I've managed to accrue a capital gain slightly ahead of inflation having bought at the worst time in a generation and then just waiting.
Somehow the property prices must come down. Either a crash or stagnating for a long time.
I'm not so sure they will come down very far or for very long. Property as a place to live is affordable (I've previously posted detailed numbers on this) even if that place isn't as desirable as what can be rented for the same outgoing.
When I was young I used to think that one day, when renters outnumber the owners, the government could be made to act. The thing is, as time went on, more and more of my generation bought a place such that most Generation Xers are now property owners. The same is happening to Generation Y too. Renters won't out number owners for a long time to come and MPs own self interest would have to be overcome.
Changes in the workplace (women working, in essence) have driven prices permenantly higher than would otherwise be the case. The days of a normal mortgage being 25 years seem numbered to me too, if we're all to be made to work until 70 then there's no specific reason not to take a 30 year mortgage, which would lead prices higher still.
I know that what I'm saying is going to be unpopular with the young. I just wish I'd understood it 10 years sooner than I did, as I could have been mortgage free by now.
Or maybe a population restriction could solve it
I just don't see how that would ever fly with voters. Either you all but stop immigration, or you restrict the number of children people are allowed to have. Any rational argument you may make either way will be shouted down by the more... emotive elements of society. The left can't even stomach restricting how many children the state will pay you to have, never mind somehow preventing you having them; and Scotland would explode with tartan rage at the thought of BrExit form the EU without which you cannot control immigration. I'm not lobbying for or against either, by the way, just pointing out that electorally neither is likely to happen.