One obsession unites the rich world: housing. As restrictions have eased, house prices have started to go through the roof. In America prices increased by 11% in the year to January, their fastest pace in 15 years. Among the 25 countries being tracked, real house prices rose by 5% on average in the latest 12-month period, the quickest in over a decade.

Home values, like the price of other assets, have been boosted by low interest rates and fiscal stimulus. Many households have spare cash sloshing around and borrowing has rarely been cheaper. Separately, COVID-19 has caused a shift in demand away from big cities to housing in less crowded places. The expectation that commuting may no longer be daily has caused house prices in suburban locations to rise faster than in cities—reversing a decade-long trend.

Governments and central banks, haunted by the financial crisis of 2007-09 and aware of public unease about expensive housing, are worrying about exuberance. In New Zealand the finance minister has asked the central bank to “consider the impact on housing” in its monetary-policy decisions. In recent years many municipal governments have implemented rent controls as knee-jerk responses to rising prices.

Policymakers in rich countries should resist. One reason is that house prices do not look as if they threaten financial stability. Although some people are wild for new properties, overall household borrowing remains restrained in the rich world. In contrast to 15 years ago, banks’ balance-sheets today have solid foundations.

Another reason to resist intervention is that housing markets are still being distorted by the effect of lockdowns. The price rises in the past year reflect a relatively small number of transactions, as the volume of activity in the housing market has dropped—it is hard to invite scores of potential buyers to snoop around your bedroom and check your plumbing during a lockdown.

Instead of being impetuous with rent control and other regulations, governments should expend more energy on tackling the housing market’s long-term problems. Top of the list is phasing out tax breaks for homeownership. Mortgage-interest deductions are a windfall to the well-off that does not boost homeownership. Despite recent reforms, America’s tax perks will still cost the Treasury $650bn over the next decade. Governments should liberalise planning rules and support new developments by providing better transport infrastructure. The strength of the property market in the pandemic confounded early expectations of doom and gloom. Even so, the laws of supply and demand dictate that housing will be cheaper if more homes are built.

Why should government intervention be resisted?