For most people who own houses it's probably not relevant that the value has gone up?
If you upgrade you pay the margin, which is higher. Legal/admin/moving costs tend to be a percentage of house value, so costs are higher.
When you retire you might downsize and release a lot of equity, but that's not going to be true for most house owners (happy to be proved wrong) - downsizing is for the wealthy, if I ever downsize it will be to a cardboard box.
Most home owners will have children, prices being high negatively effects them, and finances tend to be somewhat shared (from 0% upwards...) so prices being high is a problem here too.
Maybe I'm missing something about the situation. I guess my kids will be happy for the money when I die, but it'll be easily eaten up by their housing debts.
So people without dependents; people who are very wealthy. Apart from those groups I don't really see how house value changing after purchase helps
House prices are also way up. Lots of people who own them really like this, but it makes it harder to become a home owner in the first place.