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Government Intervention In The Housing Market Essay

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Government Intervention in the Housing Market and is it Ethical?

Intermediate Microeconomics

Two schools of thought encompass the intervention of government into the national economy. On the one hand there are those who believe that state intervention is not only beneficial but also essential for the creation of a stable economy. However, there too are those who contend that government intervention sub-optimises the economy and the free market should be left to its own devices. The current state of the domestic housing market helps to build a foundation for those who advocate for greater government intervention in the economy. Owning your own home is for many a life-long goal; government intervention has the ability to bring this dream to fruition for those in lower socioeconomic circumstances. A combination of taxation, subsidised mortgage rates and government incentive schemes are the most commonly used tools of intervention into the housing market that are available to interventionist national governments. Opponents of this theory believe that letting the free market regulate the housing sector is the fairest and most effective means of reducing or eliminating government intervention all together. There are, however, ethical issues intertwined with government intervention within the housing market and these issues must be weighed up against the economic and social benefits.

Without regulation many would find homeownership to be unaffordable and unattainable. Microeconomic theory states that lower rates of owner-occupied homeownership would affect the supply and demand for housing wi...

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