Brokers say comments from founder of British Home Group misrepresent the market and its problems
William Gale’s comparison of the UK housing market to a “pyramid” or “Ponzi” scheme is both misguided and sensationalist, according to industry professionals.
Gale, founder of the British Home Group, made the remarks this week, as reported by The Canary, asserting that the benefits are increasingly concentrated among a narrowing segment of the population, and that the market’s current structure relies on a constant influx of new buyers willing to pay ever-higher prices.
Gale, whose group has facilitated more than 14,000 property transactions worth in excess of £5 billion, argued: “The housing market only really works if new buyers keep paying higher and higher prices.” He added that these prices are “becoming more and more detached from average wage growth”, and said the situation is akin to a Ponzi scheme, where returns for existing participants depend on the entry of new ones.
Matthew Arena, of The Brilliant Group, told Mortgage Introducer that while the article raises some valid points, it ultimately reaches the wrong conclusions. “There is no doubt that the property sector demonstrates what economists call ‘rent-seeking’ characteristics, and that is far from desirable, but it is the outcome of structural problems in supply,” he said.
“We do not build enough, nor do we downsize sufficiently to cope with demographic change, and as housing is a necessity, prices are only ever going one way in that environment. Yes, there comes a limit, and yes, intergenerational wealth transfer reinforces prices, and whilst there are numerous problems in the sector, in my view it is a sensationalist comment which undermines some of the points they are trying to make.”
The divergence between house prices and wages is indeed stark, according to Gale. In some regions, properties are now valued at ten, twenty, or even thirty times the average income. “Wages adjusted for inflation have flatlined. Productivity growth has slowed significantly since 2008,” Gale added.
He went on to explain how, in his view, the aftermath of the 2008 financial crisis ushered in a period of ultra-low interest rates, enabling buyers to borrow more without a corresponding increase in monthly repayments. This, in turn, fuelled demand for a housing stock that has failed to keep pace.
Buy-to-let investors have further intensified competition. With the ability to borrow against projected rental income, landlords have injected additional capital into the market, driving prices even higher. “Yesterday’s buyers only profited because new buyers today were willing and able (due to lower interest rates) to pay even higher prices,” Gale said.
He notes that this has had a knock-on effect on the rental market, as rising house prices have made it increasingly difficult for many to get a foot on the ladder. The result is a growing reliance on the private rental sector, where, as reported by Zoopla, rents have surged by up to 31 per cent over the past three years. The so-called “bank of mum and dad” has become a critical factor in sustaining the market, and Gale warns of the consequences for those without access to family wealth.
Marie Grundy, of West One, said Gale’s characterisation of the UK housing market as a “Ponzi scheme”, even allegorically, misrepresents how it functions and ignores compelling evidence to the contrary.
She argued: “Recent data show strong first-time buyer growth across all UK regions in 2025. Historical data indicate that the current average house price-to-earnings ratio represents a return to mid-2000s levels, rather than unprecedented territory. Some areas may exhibit extreme ratios, but this is largely due to localised supply constraints.
“The specialist finance market has played an important role in supporting first-time buyers, particularly those with limited deposits and without the requirement for credit scoring.”
Grundy said, for example, that her own company has recently introduced a product requiring just a 2.5 per cent deposit, without a minimum credit score, and that regulatory thresholds for high loan-to-income lending among lenders have also been improved in 2025. Meanwhile, she added, first-time buyers are increasingly benefitting from support structures such as Lifetime ISAs, the First Homes Initiative, and access to affordable housing schemes.
She said: “While affordability challenges are real issues requiring attention, I believe that the market and the support structures available have been of great help to those looking to get onto the property ladder. It is important, however, that we continue to find more ways to support those borrowers taking their first steps onto the housing ladder.”
Pyramid and Ponzi schemes: What’s the difference?
Pyramid
A pyramid scheme is an illegal business model where participants earn money primarily by recruiting new members rather than providing legitimate products or services. Each new recruit is required to invest or pay a fee, which is used to compensate earlier participants. The scheme relies on constant recruitment and quickly collapses when recruitment slows, causing most members—especially those at the bottom—to lose their investment.
Ponzi
A Ponzi scheme is a fraudulent investment operation where returns to earlier investors are paid using the capital of new investors, rather than from profit earned by the operation. The organizer promises high returns with little or no risk, but there is no legitimate underlying business. The scheme inevitably collapses when it becomes impossible to attract enough new investors to pay existing ones, resulting in significant losses for most participants.
