> People with access to debt bid up the price of an asset, like a house, against other peoples’ similar access to debt.

That might be true now, but it would not mean house prices would go down, it just means more people would rent.

Think about how these loans work right now... people with money they don't need right now loan that money to people who want a house but don't have the cash right now. The reason they loan that money is they want to earn a return, which they get in interest on the loan.

Let's say all consumer lending is banned, and you can't loan money to people to buy a house. Well, the people with that money still want a return, so they will invest it somewhere else. Where can they invest it?

Well, one option is they could buy houses and rent them out. Since they only have to compete with other people with money (since poorer people can't get a loan for their house), the price is going to be much lower than it is today, which means they can get a better return by buying the house and renting it out.

So now you are still in the same situation with house prices, but there is no way for you to get any part of that return.