We think of deflation as a bad thing. From a business perspective it is. Business is about solving problems, but if you solve them too well, it isn't good business. An ideal business is one which generates a regular, growing, stream of cash. It is one you can reinvest in, so that it is doing more 5 years down the line than it is doing today. It is one which is attractive, but not so attractive that other people stop doing what they are doing and come and compete with you. If they do try and compete with you, there should be barriers to entry. Reasons they shouldn't or can't do what you are doing.
As a 'business', the reason housing has been a good investment is because of the barriers to entry. There has been massive urbanisation and massive population growth. Most times, businesses make money because they have solved a problem well. In the case of property, there has been loads of money made because we haven't handled a challenge very well. All that has happened is there haven't been enough homes to go around. So we have made it easier to borrow to buy. All that does is makes more money available to make the prices even higher.
The truth is, no matter how wealthy you are, you sleep for about a third of your life. When you close your eyes, there is less than a 2m by 1m by 1m space in the world that matters to you. If you wake up, and crack on with life, that is all you need. Obviously there are all sorts of things we want. And will pay for. Tap Water is almost free in most developed countries. Tap Housing should be too. If you want to make your water bubble and throw some flavouring in, awesome. But over time, we should get better at solving standard problems. Housing is a standard problem. If you buy a single house, and it is worth more years down the line, that means we have collectively done a bad job.
That is not to say you won't make money 'investing' in your house. If we carry on doing a bad job of solving the housing problem, people will carry on making money by being on the right side of the equation. I prefer the idea of thinking of money as an employee. Asking not only whether it will make money, but why it will make money. What is it doing that is useful? Why will that be more useful tomorrow than today? If the only answer is supply and demand, I will politely move on. Plenty of people won't and will do very well.
House deflation would be a good thing. Unless you are invested in houses.