I’ve posted this before, but I think the reason house prices are expensive in the UK is that they are an asset. If the rich can buy that asset and make a return, they will buy it. So price equilibrium is where rents are at an absolute maximum that can be born by tenants. As the price is determined the potential yield, the price then rises as high as possible.

Building more houses won’t change this situation until the number of houses is greater than the number of tenants. At the point where the number of tenants equals the housing supply, the returns can still be made and prices will be bid up.

The problem is that is a competition between the rich buying as an asset vs the rest of us buying as a home. The only solutions are to reduce or eliminate the possible returns for the rich.

And as posted if the prices are then allowed to fall, the whole economy is in danger, because it is based on the creation of illusory wealth via asset inflation. Remortgaging a house that has risen in price feeds money into the economy, despite no wealth actually being created. And the entire economy is based on this, because the rest of the economy has been destroyed by neoliberalism.