> Unlike the developing world, the developed world is perfectly capable of building a house for every man, woman and child. If it did, poverty would all but disappear; it's hard to be poor when you have your own house.
> The top countries by home ownership are Romania, Lithuania and Hungary, while UK and US are in the 33st/34th position and Germany/Switzerland 10 positions
That has very little to do with the question. Housing costs the same amount to construct whether it's rented as apartments or sold as condominiums and the amount people are paying in rent is generally sufficient for the owner of the apartment to turn a profit.
The problem is they can't afford to buy the housing they're living in and the mortgage interest tax deduction only makes it worse. The reason renters can't buy is that they have bad credit and no down payment. The tax deduction doesn't change that, but what it does is cause the people who can get a mortgage to bid up housing prices. Higher prices requires people at the margin to have a higher down payment, which pushes them back into renting. Meanwhile higher home prices put upward pressure on rents because renters have to pay enough to overcome the landlord's opportunity cost of converting many small apartments into fewer large condos. The higher rents make it again harder for people at the margin to save a down payment, pushing them further away from home ownership.
Then the people who have paid $250K for a house that should be worth $150K realize that the price of that asset has an unduly large consequence for their net worth, so they push to eliminate high density housing and do everything possible to increase housing prices. After that the house that should have cost $150K costs $450K and the idea of doing anything to reduce housing prices is very politically unpopular indeed.
Making housing affordable is easy: Subsidize the construction of high density housing and penalize destroying existing high density housing without replacing it. "Make housing more affordable" is literally the same thing as "lower housing prices." Increase the supply, price goes down, more people can afford it. Meanwhile middle class people invest more of their money in economically productive activities rather than housing speculation.
> The reason renters can't buy is that they have bad credit and no down payment.
At least over here, the reason is not bad credit nor need for down payment. The reason is that they do not have enough regular, stable income.
Their rents are subsidized, but the same subsidy is not available for buying property. Which does make some sense, of course.
> Making housing affordable is easy: Subsidize the construction of high density housing
No. Generally, in European countries and areas with high demand for housing, subsidizing construction is not necessary, and could be counter-productive. Making land available for construction is enough.
In areas of high demand, housing is much more expensive than construction cost, and that is because there is more demand than there is supply. And in areas where there is shortage of housing, supply is limited not by inability to construct, but by unavailability of plots to build.
Give me some land, and I can build a house myself.
> Their rents are subsidized, but the same subsidy is not available for buying property.
That's just a whole different brand of stupidity. If you're going to subsidize people, just give them the money and let people decide whether it's more important that they pay rent or buy a house or live with parents and go to college etc. Central planning bureaucrats are going to get it wrong nine times out of ten.
> Generally, in European countries and areas with high demand for housing, subsidizing construction is not necessary, and could be counter-productive. Making land available for construction is enough.
What land? You can't make land. There is plenty of land in the middle of the desert or the tundra but nobody wants to live there. What you need is to find some old two story apartments in places where people actually want to live and put twelve story condos there instead. Or in bigger cities, replace the twelve story buildings with fifty story ones.
You don't even need subsidies. That is what the market would do naturally when housing is expensive, the problem is local governments actively interfere with it. Existing residents don't want the homes they already own to go down in value when the housing supply increases, so they throw up a bunch of zoning regulations that de facto prohibit the construction of high density housing.
As to making bigger houses, you're quite right, but that's another aspect of "making land available". The land is there, zoning or lack of building permit does not allow developing it.
notice that ex-warsaw-pact countries all have high home ownership due to having expropriated property and having had large "social building" projects (which also lead to some horrible places though).
If only that was true. The top countries by home ownership are Romania, Lithuania and Hungary, while UK and US are in the 33st/34th position and Germany/Switzerland 10 positions below: http://en.wikipedia.org/wiki/List_of_countries_by_home_owner...