In Sweden, the government fell in June this year when it introduced legislation that would have led to a rise in house rents. And in the recent elections in Germany and Canada, political parties promised new policies to keep house prices and rents in check, as cities across the world are registering an unprecedented spike in real estate prices, even as the rest of the economy struggles to keep pace. The issue is not limited to the developed economies in the West. In China, for instance, one of the motivations for a recent crackdown on real estate companies like Evergrande was the spiraling rise in house prices that has led the average price of a house in Shenzhen, the hub of the Chinese tech industry, to rise to 43.5 times the average annual salary. Prices in Seoul have risen by more than 90 percent in less than four years, while price rises in European cities like London, Berlin, Frankfurt and Paris are beating previous records. In the US, rises in 2021 have left the 2008 housing bubble, which eventually led to the worldwide financial crisis, seem like a recession. What has been the biggest surprise is that, even as the pandemic raged across the world, house prices kept on rising as if powered by some miracle, especially as economic uncertainty led to every other sector collapsing. The situation is now so serious that most governments, whether on the right or left, are being forced to introduce policies aimed at curbing the inflation afflicting the sector. In Berlin, for instance, the municipality has bought almost 15,000 apartments from corporate owners for €2.5 billion ($2.9 billion) in order to lease them to the weaker sections of society. Similarly, some other governments are bringing in or tightening rent control laws. In Canada’s recent election, Prime Minister Justin Trudeau’s party promised to bar foreigners from buying up homes in order to keep prices in check. The situation has turned so serious across the world that it is threatening the futures of hundreds of millions of young people, who are seeing their dream of owning a home evaporate into thin air. Many of them are not even able to afford to rent a house on their own and are being forced to move back in with their parents. But even harder hit than the young are the underprivileged sections of society, notably single parents, who are facing the prospect of being rendered homeless in the face of the rise in both rents and house prices. There are two main reasons behind the price rises. One is, of course, the issue of supply and demand. In most countries, homes are in extremely short supply, especially in places where an abundance of jobs are available or where jobs are much sought-after, such as in technology or financial services. This short supply is partly to be blamed on governments, as they keep a strict check on building rules within cities and most urban development programs fail to adequately account for demand, meaning cities tend to run out of homes. Another reason is that, with low interest rates, housing offers one of the best places for investors to park their funds. This speculative buying leads to the disappearance of the few homes that come on to the market. With a severe shortage of homes, even those looking to buy a house on their own are forced to rent, and this has led to rents rising even faster than house prices. This puts the poor, especially single parents, in a difficult position. Even without the recent rise in rents, finding a suitable house close to their place of work and with the necessary social services, such as a good school and shops in the vicinity, was a nightmare for most people, leading to a spike in homelessness. The housing situation has become so critical in California that it has led to a number of large firms moving their bases to another state, where their employees can find affordable housing. One recent example is the electric car manufacturer Tesla, which is moving its headquarters to Texas. If the situation is so challenging for tech workers, who are among the best paid in the world, it is difficult to imagine the situation for those in poorly paid jobs like in retail or the informal sector. The housing crisis brings with it a number of challenges. The world has seen unprecedented low interest rates that have led to a sharp rise in mortgages being taken out by people seeking to own their own homes. But as interest rates begin to rise, which they will do by next year at the latest, one can imagine a repeat of the 2008 financial crisis, which also began when the housing bubble burst. That crisis also hit the poorest sections of society the hardest, while investors and speculators managed to get out of it with barely any damage. We are now only eight years away from the deadline that all governments of the world set for themselves to provide housing for all as part of the UN Sustainable Development Goals. But the world remains perhaps further away from achieving this goal than it has ever been. It is time for governments to take the matter into their own hands and change some rules. First, they need to rapidly increase housing supply, both by building more homes themselves and incentivizing private builders. This would also mean changing zoning and housing rules to facilitate construction, which is currently heavily constrained. Another measure to be taken by governments is to keep a check on rents to ensure that any rises are linked to inflation rather than the greed of landlords, which are often immensely profitable financial services companies like banks and insurance firms.