On the way to a meeting in South Kensington recently, I passed a basement flat, and my heart sank. The huge, two-bedroom flat with a fabulous skylight and courtyard was mine about 25 years ago. I sold it for under £50,000 – it must now be worth £2m.

I wailed about this to a young professional couple, the same age now as I was when I lived so carelessly in west London. They were contemplating a small, two-bedroom property in the outskirts, by a railway line and flanked by high-rise blocks. It costs £800,000.

Houses have become so precious they take on an anthropomorphic quality. They are dug out and built up and ceaselessly redecorated. Builders, delivery vans and skips have replaced social activity and even family. The building of basements in the grand areas of London has proved the great torment of the rich. The cost of converting a house in one particularly splendid road in Notting Hill included putting a famous neighbour into temporary and equivalent accommodation. No wonder conversation in London is obsessively property based. Property is destiny.

John Lanchester's new novel, Capital, this month's great literary event, examines the extraordinary role of property in our lives, economically and psychologically. Lanchester takes a fictitious street in London, once working class and now inhabited by bankers. He wittily dissects the cost of living for the beautiful-houses classes. One investment banker anxiously awaits confirmation of his £1m bonus. He has a London and a country house to maintain, plus several holidays a year, school fees, staff. Money seems to melt from him. The banker does not mind this, "but it did mean that if he didn't get his million-pound bonus he was genuinely at risk of going broke".

Robert Peston joined the chorus of disapproval of bankers' salaries last week, presuming that they did not need the money. It is enlightening to read Lanchester's well-researched novel and discover that, within their worlds, perhaps they do.

The public mood is one of economic recrimination. How did we ever run up those debts, how were those salaries ever paid? Because we were all slaves to our houses. It is interesting that the 21st-century kind of business success, Mark Zuckerberg, never showed much interest in doing up properties.

It is economically unsound for homes to become casinos, and many are now blinking at losses as others sit on dizzying profit. But I don't buy the view that infatuation with houses is a cultural disease and that we should all go European rental. Buying property is hellishly hard for the young, especially in London, but it is still a worthwhile aspiration.

Tessa Jowell recently described her political epiphany as a Labour candidate in London, when Margaret Thatcher was in power. Jowell saw coach lamps appearing outside former council houses, and realised that Labour would never again win power unless it moved to the centre.

Home ownership is the optimistic basis for a civil society. The answer is not to condemn unaffordable housing, but to build more low-cost homes. You do not have to be an evangelist for the Olympics to welcome the thousands of new homes being built in east London. More builders, more delivery vans, more skips. Love of houses is not the root of evil. It is the lack of houses that is wretched.

Sarah Sands is deputy editor of the London Evening Standard