I think the huge growth in housing costs, which represents a transfer of wealth to the already wealthy, can account for the soaking up of much of the extra cash”
This is in part a result of a government policy as manipulation of the housing market through planning restricting supply through greenbelts allocations and sometimes aritary use requirements (empty offices that could be used houses)but also through pushing demand through tax incentives, and subsided borrowing the interest rate manipulation.
Also governments having a policy of not let prices adjust downwards to quickly. Property is in effect insured by the state, governments will distort the rest of the economy through considering the housing market in setting or the parameters they targets set bank of England.
The property price increases in part "a kin" to a "tax" on those who rent to those who own, also intergenerational “tax”. Although not tax and spend on the figures. It’s a kind of transfer payment from renter to owner, that occurs in part through government manipulation of the market ( the part above what the "real" or "freer market" equiliberium point would be), indeed in respect to housing governments policy may have done more harm that good on occasion.
With rent being a function of house prices, even with a lot of lag, the governments bidding up housing prices has the effect of a regressive tax. Of course its always presented as a natural occurring thing which is somewhat of a mis frame if strip out the governments controls then things may look differently.
I also tend to think this is important in respect to planning and transport. As one of the reasons people do more journeys is because of housing costs and the lay out of towns is also largely influenced by the high prices.
It may also have the perverse effect of reducing efficiency of property in respect to use, as part of the value or property is the investment part as well as use part. Because the investment part may be bigger in the uk than say some of European neighbours can get properly under used at times when more focus on holding as an investment. There is also a theory takes investment from more productive use, property being somewhat of a “tulip”.
So in respect to peoples having a higher average real wage, do we mean or medium as they has been a divergence over last 30 years, of course it also depends on what basket of goods is used as index in respect of property people have a lower income now.