It is different in Australia though it's not an especially liquid asset anywhere. Market has flattened, but it's still strong. Prices tend to double every ten years but moved more quickly recently. Haven't heard of anyone not able to rent their property out. Most people who can afford to will buy property. There is no expectation that rent will cover a mortgage - you pay the shortfall and it's still a deal worth considering.
The difference between the UK and Australia is Australia has tight controls on foreign property ownership, and it can be quite a hassle to buy if you're not a long-term visa holder or citizen. Long-term visa holders also have to sell the property at the end of their stay.[0] Australia also has a decent number of moderate-stay (<=12 months) temporary residents (working holiday, etc) that aren't allowed to buy under FIRB guidelines, or don't have the fiscal means, both of which increase demand for rentals.
I strongly doubt whether the increasing price of housing is sustainable. If it's increasing beyond that of inflation, it's a bubble and people simply just aren't going to be able to afford it. People on the upswing of any market become complacent that prices will always continue to rise, but this isn't necessarily true. The future is yet to be determined, and who knows what will happen.
I have known landlords who have had their properties vacant for several months at a time. Their mortgages continued though and this put a lot of pressure on them financially. There's also the issue of tenants that end up not paying, or paying late, etc.
You're not wrong and your strategy has a strong superficial appeal: property ownership with flexibility! Properties can be rented out, it's possible to find great long-term tenants, and it's even possible to break even or make a slight profit as an amateur landlord. Your strategy can be made to work, it's just the costs probably aren't worth it unless you're a landlord with a good number of properties. I'd argue the actual flexibility is marginal compared to renting; if I want to leave my rented property, I can do so quite easily and with minimal moving costs. I do appreciate the cost of this flexibility too though: I'm paying someone else's mortgage with nothing to show for it in the long term. Also, owning has the distinct advantage of control: nobody's going to be a more accommodating landlord to me than me!
[0] This assumes that the property is a second-hand dwelling, not one bought from a new developer, or been renovated, or any of the other exceptions that come to mind.
There is a fixed amount of land, a growing number of people, and social norms limiting high-density. Of course property will be sustainably outpacing inflation, until at least one of those changes. It's not a bubble when demand is increasing for legitimate reasons rather than speculation.
Which isn't to say there is not a speculative bubble - the price of real estate may well be growing faster than it should - but just the fact that it's growing faster than inflation doesn't demonstrate this.
Have to admit that I find this perspective on property baffling as an Australian. People here in SA act like its the end of the world if the market appears to flatten or a property takes a few weeks to sell. Not denying that a bubble could exist, but there are always tenants here and land is consistently in demand. The stories of doom are generally anchored to a glut in apartment development and/or Eastern states. Property with land is not so susceptible with ever-rising demand (immigration, investment properties, etc); e.g., my place is 750sqm, I demolished an older house and built new; within two years of buying, the land value alone was $100k up on the original purchase price.
In the UK, from the time a property is listed with an estate agent to the time conveyancing is completed can be on the order of several months, if not vastly more. It's not fast, especially because the buyer's and seller's lawyers doing the conveyancing take their sweet time to talk to each other, the surveys take time, and dealing with the local council and land registry, etc isn't immediate. Also, buyers in a property chain can cause problems if one of the deals in that chain falls through and they don't recover. It's hard work buying or selling somewhere in the UK. It's not a happy process!
The reason I think there's still a bubble is that housing costs are increasing faster than wages. More and more of peoples' budgets are being spent on just protecting themselves from the rain and scorpions, and at some point this cost just becomes untenable and a correction, or worse a crash will occur as the market can no longer bear such prices.
I'm very skeptical when I hear someone articulate that prices must always go up in the long term because they have in the past. They might continue to rise for a while, but eventually ... pop goes the bubble!
Future stock of tenants (people who can't afford to buy) requires home owners to rent to them. In fact, housing affordability can be problematic here because investors are usually in a stronger position to buy a property to rent it, outbidding someone wanting to live there. You might be aware of negative gearing, too.
Just curious, were your parents an influence in how you view property? I imagine here that many 18-30s whose parents bought property would be more likely to buy for themselves.
Thinking about it, the only friends I can think of immediately who doesn't own their own house here (out of say 20-30 people) are still studying or recently finished. And both would be planning to buy within 2-3 years.
It is only a deal worth considering because the rest of us taxpayers get to pick up the bill for a portion of the loss via the bullshit tax scheme known as negative gearing, where you can claim losses on you investment property as a deduction against your personal income (cf. places like the USA where I believe you can do this with only your primary residence).
As a result, the price of houses in Australia is completely disconnected from the rental returns, and instead driven by speculators chasing capital gains, and/or income tax minimisation by engaging in negative gearing.
