"Our goal is to make houses unaffordable"

Former Federal Reserve Chairman Alan Greenspan, speaking on 15 March:

If we could wave a wand and housing prices go up 10 percent, the subprime mortgage problem would disappear. Source

Our policymakers have become so bewitched by the numbers that they fail to see what they represent. Sure, a rise in house prices would solve one problem; but one’s person’s increase in housing equity’s is another’s missed chance of home-ownership. In a conflict between competing groups of people, it seems that it’s policymakers will favour those groups that

• have greater lobbying power

• are hit most visibly,

• are hit most suddenly.

Governments in the rich countries worldwide seem to be doing everything they can to keep property prices high, trying to postpone a crash at least until the next general election. High house prices have joined per capita Gross Domestic Product as a de facto government target. The sadness is that these numbers do not correlate with social wellbeing. The losers are not just the less powerful groups – would-be homeowners – but the natural and social environment as well. Targets such as house values and GDP per capita don’t tell us anything about real social problems: homelessness, poverty, mental and physical health, or the state of the physical environment. Note to politicians: high house prices mean misery for large numbers of people. And a high GDP is at best a means to ends, not an end in itself.