Houses are only good investments if you can rent them for a price that will yield an attractive return. People will only rent a house for a price that they're

Houses are only good investments if you can rent them for a price that will yield an attractive return. People will only rent a house for a price that they're willing to pay therefore this isn't a bubble as you imply (people are only buying because prices go up), so presumably it's a supply / demand issue. It's extremely easy to say "reee, why don't the government build more homes!!", but where exactly do you build more homes in central London? Oh no, sorry, you meant build more homes where there's free land? Sure, but people don't want to live there. The issue is actually far more to do with urbanisation than anything. For example here in the UK there are plenty of places that are extremely affordable to live, the issue is that they're in rural and generally undesirable areas so no one wants to live there. When people say house prices are too high, what they actually mean is that they can't afford a house in London or some other attractive city they want to live. It's not that an average wage wouldn't get you a decent house in say Middlesbrough where the average property price is ~£150k - it's that an average wage won't get you a decent house in a nice city location. A first time buyer could easily get a two bed house in Middlesbrough for around £100k. In my opinion the solution is counter intuitively to stop building more houses in cities. The more you build in cities the more jobs and more people relocate there. And that feeds on itself because then more people want to live there because that's where all the action is. If instead we invested in places like Middlesbrough and offered employees incentives to relocate we could distribute the demand for housing away from over populated cities. We could also couple this with investment in public transportation and incentivise remote working which would allow people to comfortably live further out of city centres. Though, I suspect this is understood fairly well by governments. I think they actually see urbanisation as a good thing because it's more efficient for business to have a pool of labour and consumers concentrated in a small geographic area. The only real cost is congestion and house prices, but that's a cost to humans, not businesses.