Is there anywhere where housing is not a problem? In much of the United States and Europe, property bubbles have burst and prices fallen. In the US derivatives based on subprime mortgages brought the banking system close to collapse. In some European countries today, like Spain, the trend could still threaten the banking system. In parts of Asia, things are the other way round. In Hong Kong and many cities on the Chinese mainland, rising property prices have left homes unaffordable for much of the population. Singaporeans are making similar complaints. Young people in these cities are especially angry, and governments are adopting a variety of policies to try to prevent further price rises.

We can trace much of this back to global imbalances and government monetary policies that led to interest rates around the world being too low. This created classic conditions for a debt-fueled bubble. But why does the bubble appear so much in the prices of housing, and to some extent other real estate? It is true that prices of gold, commodities and in some cases equities also increased during this process. But property seemed to receive a particularly large amount of the excess money flowing around the system. And the result - unaffordable homes - causes far more social unhappiness than, say, unaffordable gold.

One basic problem is that people and governments in many parts of the world can't decide whether homes are places for people to live in or assets for them to invest in. Instead, we like to think they can be both. And we try to get around the contradictions through measures like public housing for poorer families or short-term measures to limit rapid rises - or sometimes falls - in price.

In Singapore, the government has gone further than in most places by trying to provide the vast majority of the population with housing at an affordable price. But there are still contradictions. In some ways, Singapore tries to treat housing in the same way as public transport, schools or healthcare - in other words, as an investment in social and economic development. But at the same time it wants to promote home ownership, to give people a stake in the nation, encourage self-sufficiency and to enable people to acquire a store of wealth. So even public, affordable housing is not just for living in, and buyers have been betting on rising prices.

There are two ways to have affordable housing. One is to wait five years or more while the new homes are built. As the current Hong Kong administration has found, it is easy to promise more affordable housing but basically impossible to deliver it over a practical period of time. The alternative is to wait for - or in theory even try to create - a crash in the property market. This brings us to another contradiction about housing markets in much of the developed world: for everyone who is pleased when homes become more affordable, someone else is angry because the value of their property has fallen. For everyone who needs a home to live in as cheaply as possible, there is someone who wants his real estate investment to rise in price.

Much of the middle class have their wealth tied up in property, and will be unhappy if (or when) prices come down meaningfully. Meanwhile, some people live in appalling conditions, while even the young middle class see little hope of affording private housing. A large-scale increase in public housing is the obvious answer, but land is in short supply and environmentalists oppose more development - and there are plenty of flats that are left empty as investment properties. Whatever happens, someone will be angry.

The mainland, perhaps, still has time to avoid making the sort of mistakes Hong Kong - and other places - have made. Up to now, real estate development on the mainland has been a key source of local government revenues; this sort of system has some advantages, but it has certainly contributed to distorting Hong Kong's property market. Also as in Hong Kong, property on the mainland has been a popular investment; with relatively few other investment options, the middle and upper class have pushed housing prices out of reach for the less well-off.

However, the central government has shown it is serious about deflating a growing bubble. For example, it has raised the minimum down-payment on second homes and imposed capital gains taxes. These policies are very much aimed at speculators and investors; first-time buyers and end users are not greatly affected.

Looking ahead, the mainland has a great deal more urbanization to come. The government has shown decisiveness and determination in tackling the current overheated private-sector housing market. It has the opportunity and resources to take a new approach to future housing, by treating residential property primarily as a necessity for the economy and society - especially the lower earners - rather than as a speculative investment for the wealthy. This could be done through greater provision of public rental housing, but also maybe through encouragement for privately owned rental accommodation.

In some countries in Europe, such as Germany, the majority of people from all economic classes rent housing - which is plentiful and thus affordable - throughout their lives. The result is a more equitable and harmonious society, and an economy that is less exposed to asset bubbles and busts. It is too late for most developed economies to abandon the culture of mass property ownership and property investment - and indeed property mania. However, the mainland perhaps still has a chance, especially as second-tier cities continue their rapid growth, to adopt a model in which housing is first and foremost about homes for ordinary people and the building of a balanced society and economy.

The author is a member of the Executive Council and president of Asia Financial Holdings.

(HK Edition 05/14/2013 page1)