A Decade of Cheap Credit Drives a Western Housing Affordability Crisis

Across the United States, Europe and other advanced economies, rising rents and home prices have outpaced wages, turning housing affordability into a central political grievance. The debate, as Al Jazeera framed it, increasingly sets the view of housing as a basic right against its function as an investment asset.

The causes of the problem are not only a shortage of supply. Years of low interest rates and abundant credit channeled capital into property, inflating asset values faster than incomes could rise. When central banks held the cost of money near zero, housing became a preferred store of value, rewarding existing owners and making ownership less attainable for younger and lower-income households.

The shift toward higher rates has not resolved the tension. It has raised mortgage costs for new buyers while doing little to lower prices, keeping housing costs high for both buyers and renters and increasing demands for political intervention.