Thats hard to say. Most people in the UK currently pay 2x -3x as much for their housing as they need to. This is a result of government policy to restrict housing. Just how would all our budgets look if this huge expense was taken out of them? If you are going to start unravelling mistakes of the past then this is one of the biggest. Along with allowing insane borrowing for everything else, of course.
The poor in the UK don't pay a penny towards housing! It's state subsidies towards private landlords that keep rents high, allied to the mass immigration policies of the labour party - & they're getting higher.
UK rents rise by record amount in August | Money | guardian.co.uk
It's people like RMT union 6 figure earning boss Bob Crowe & others, staying in council/housing association houses & paying £300/month when they could afford their own homes, or rent privately, that screw up the system.
70% of the UK is owner occupied - 10% privately rented, & 20% council/housing association - meaning 5 millions dwellings, & 11 million people live in them.
BBC NEWS | UK | Plea to build new council houses
The government has finally wised up to how uneconomic public housing is, & is finally putting up the rents - but idiotically, only for new tenants! There is no plan on harmonizing the rest, or means testing current occupiers who are probably saving themselves £5,000+ a year, or subletting illegally.
I'd agree that house prices should be a third less in order to match the 4*earnings average criteria (£25,000*4), BUT because interest rates are so low, say an SVB of 3.5%, a £150,000 mortgage @3.5% has the same monthly payments of a £100,000 mortgage @ the more historically usual 7.5% - about £750/month
BBC - Homes - Property - Mortgage calculator.
The historically low interest rates that we have mean that when interest rates go up - there will inevitably be a crash in house prices - that's why inflation heading upward to some extent masks this.
If interest rates went from 3.5 to 7.5%, a repayment mortgage would go up by 50%, & obviously an interest only would double.
It think that both Yorkshire & Chelsea BS's do very good 10 year fixed rates about 4%. I'd advise anyone to seriously consider getting these. Seriously!
As soon as the rates rise, we'll probably see repos on an unprecedented scale - & it will certainly enormously damage the domestic economy, as all that interest paid will have been diverted away from goods & services.
Of course, who'll swoop in & mainly buy all those repos - the rich of course:wink: