【正文】 1, pared with 115m households, and anyone who bought before then is probably sitting on a nominal profit. However, as Harvard University’s Martin Feldstein points out, if house prices rise, people feel richer and borrow and spend more. If they feel poorer, they may cut back even if the price of their house has not fallen below what they paid for it. Subsidies to home ownership have thus increased economic volatility. They boosted consumption, as homeowners used their houses as collateral to finance consumption or investment. In America mortgageequity withdrawals reached $9 trillion between 1997 and 2021—equal to more than 90% of disposable ine in 2021. This gave homeowners more to spend in the good times but less in bad ones. In Britain homeequity withdrawals added the equivalent of 3% of posttax ine to households in the fourth quarter of 2021 but subtracted 3% a year later. So changes to house prices aggravate the economic cycle. Recent research by the IMF finds that a quarter of the 100odd recessions since 1960 have been associated with houseprice busts and that these contractions “are deeper and last longer than other recessions do”. Subsidies to home ownership have also weakened financial services. They encouraged more people to buy houses (which was the point), but, logically enough, also encouraged lenders to take greater risks with housing. This was fine while house prices were rising, but the fall exposed how vulnerable banks’ balance sheets had bee. Moreover, if public policy aims to create wealth, there are other ways of doing it. People could invest their savings in the stockmarket and rent their homes, for example. Had they done so in the past two years, they would have done worse than homeowners. But for three decades before that, equity prices easily outstripped property prices (see chart 2), so in the long run equities have been a better bet than houses. (Admittedly, this strips out the effects of share dividends and imputed rents, which favour property.) Housing suffers from two further weaknesses as an investment. It sucks up disproportionately large amounts of money, falling foul of the idea that investors should diversify: in America the equity tied up in houses accounts for 45% of the worth of the average householder. And it is illiquid. If you need to raise money, you cannot sell a room or two, whereas you can always sell a few shares. It is hard to argue houses are the best asset for building wealth. “Perhaps the most pelling argument for housing as a means of wealth accumulation”, argues Richard Green of the University of Southern California, “is that it gives households a default mechanism for savings.” Because people have to pay off a mortgage, they increase their home equity and save more than they otherwise would. This is indeed a strong argument: socialscience research finds that people save more if they do so automatically rather than having to choose to set something aside every month. Yet there are other ways to create “default savings”, such as panies offering automatic deductions to retirement plans. In any case, some of the financial snake oil peddled at the height of the housing bubble was bad for saving. Subprime, interestonly and other kinds of mortgage instruments allowed people to buy their homes without a downpayment and without building up equity. “Negative amortisation” (negam) mortgages even let people pay only part of their interest each month and to add the rest to the principal, increasing their debt, not their savings. Homeequity loans had the same effect. Where the heart is The main arguments for home ownership, though, are not primarily economic, but social. Home ownership, argue those who want to expand it, benefits society because it encourages stable, more lawabiding munities。 reading levels were 7% higher. This had nothing to do with ine: the research controlled for that. In another study homeowners’ children were 25% more likely to graduate from high school and more than twice as likely to go to university. Their teenage daughters were also less likely to bee pregnant. These studies, though, are not the last word. They find a link between children’s education and homeowning. But is this because, as some suggest, home ownership requires parents to possess managerial or financial skills that they pass on to their children? Or is it because the people with those skills help their children at school and also buy houses? No one knows. Nor is it certain that owners always take better care of their neighbourhoods than renters do. Some studies claim that the effect in fact depends on a few publicspirited people willing to set an example. Renters can be pub