Sure, they're an investment too, but properties bought primarily to live in, with investment as a handy side effect, do not have the same effect on housing availability and affordability. Each such purchase reduces supply by 1, but also reduces demand by 1, and gives someone relative stability.

So purchasing to live in is not what "property investment" refers to in this context. It has a narrower meaning than "anything you could conceivably think of as an investment".

Aside, houses do in fact wear out, need regular repair, and eventually most get demolished because regular repair isn't good enough.