Can Governments Ever Provide Affordable Housing?
Human beings are social creatures. All over the world, human beings want to live in their own houses. This is the reason why all the governments in the world also try to woo their voters by promising them affordable housing.
Governments all over the world from the United States to India are trying to enact policies that would create affordable housing. However, the reality is that the best way the government can make houses affordable is by not creating and policies and letting the markets function. It is a known fact that when politicians meddle into economic affairs, the results are less than impressive.
In this article, we will have a look at exactly how the governments policies make housing less affordable.
How The Government Makes Property Expensive?
Governments all over the world enact legislation at different levels which end up making the property more expensive. These policies are as follows:
In the United States, the government enacted a policy to create more affordable housing. As per this policy, they started giving loans to everybody regardless of whether they had the credit required to back the loan. The government had even created agencies whose jobs was to buy these loans and infuse cash to the banks who could then make fresh loans once again.
It is strange that the government thought that infusing excessive cash in a market would help lower prices. The result was completely predictable. During the period from 2000 to 2008, housing prices in the United States went through the roof.
The record of history is very clear. The only way any government can help reduce housing prices is by staying out of the housing market! Yet, each and every government tries to meddle in the housing markets in the hope of political gains. It is time that the voters realized that it is efficient markets and not political promises which provide cheap housing.
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