Government now has to decide who to reward and punish. Without more land to build and especially with the runaway prices of the past how could you not be caught in a bind and cruel trade offs between asset appreciation, new house owners and electoral support?
In the end the government will do whatever is needful to retain and earn voters' support. Let's not kid ourselves about the long term. To this government there is no long term if they are out of office.
The key and swing voters will be the young and they need to be able to afford their first property. Every consequence and collateral damage to existing stake holders is acceptable political cost.
In the long term we must be cognizant that "safe as houses" will eventually turn out to be fool's paradise. There is no historical evidence to support the long run wisdom of your live-in property as an asset. For now owners look clever. Only for now. Therefore the wise owl need to cash out earlier than most, and he is likely to do so too early. Except by luck, this can't be helped. Too early and you could lose big too. Now loss aversion would suggest that most will do nothing and one day ride the market down with everyone.
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