Great question @Erith.
I think there are a few elements to this question.
1) So you buy somewhere to live, pay off the mortgage, and from that point your cashflow should significantly improve as you have minimal ownership costs. Now whatever happens (providing you can cover the insurance and maintenance costs) you've got somewhere to live for the rest of your life, and your kids have somewhere to inherit.
2) Renting is a great lifestyle choice... while you are still able to seek out employment if needed to pay for the roof over your head. If the stockmarket gods have a tantrum, or your local market decide to copy Greece (or Spain or Iceland), then that might put a big dent in safe withdrawal rates or passive income streams that are relied upon to pay the landlord. An inconvenience if this occurs in your 30s, a very big deal if it happens when you are in your 80s.
3) Owning a property, even in a potentially inflated market, can be a useful tool for furthering your investment portfolio and offsetting the opportunity cost issue. Debt recycling is an approach that lets you apply accumulated equity in your own residence to use as a deposit on investment properties, or pursue other investment options.