Hence in many countries in Europe, e.g. in the Nordics, there's one simple way to gradually reduce prices: reduce the supply of mortgages for more expensive hou

Hence in many countries in Europe, e.g. in the Nordics, there's one simple way to gradually reduce prices: reduce the supply of mortgages for more expensive housing. The state backstops most mortgages, but by the same mechanism (or with the help of the banking regulator) also sets the rules on how to give them. When prices get too hot, the regulators simply decrease, or refuse to increase, the nominal amount of the max mortgage you can get with the state's support, and/or the maximum allowed mortgage repayment as a percentage of your monthly income (in a stress-test at 6 % interest rates). Lowering the demand immediately pushes down housing prices; regulators stop when prices are down 15-20 % so that the banks avoid losses. This is possible in the USA too, given nearly all mortgages are federally supported.