i have been told by a Singaporean thats pretty much how it operates there for about 80% of the population
there are plenty of other solutions to housing affordability
simply have a much bigger deposit when buying a house would keep prices down and protect the banks from going belly up
also for investors make the deposits much higher than primary residence mortgages - this is what they are doing in China i believe
also get rid of negative gearing and tax on bank interest
1) We still have that here, it is called state housing or housing commission houses, but it was too expensive for the state guvnuts to manage, so it is being scaled back.
2)You can make the deposit as large as you like, the investors that have substantial equity will still get the loan. For example, I have properties that have no debt, all I need to do use some of that equity to borrow more that enough for a deposit on the next property.
3)Many investors operate the rental properties as a "Business" and as with all "Businesses" any expenses are claimed as a cost of doing "Business". For example, If I had a "Business" which had an overdraft facility, all costs incurred while operating that facility are a tax deduction against any income.
So I don't see how your suggestion will make homes more affordable.
What you need to do is build more houses to create a glut, by the way, more houses on the market is not the same as having a housing glut because those house for sale are not all empty. If they were all empty then you would have a glut and prices would come down, but I don't see that happening any time soon. My view is houses and rents will increase and many would be first home buyers will be stuck renting for life. There are affordable houses out there but some people let their pride get in the way of a good decision.
