Is it really dangerous to channel savings into the financing of housing? The case of France

It is often claimed that savings should be channelled into financing companies , and that using savings to finance housing is inefficient ( it does not generate additional growth ) and dangerous ( it can give rise to a bubble in real estate prices ). This argument is now being used in France to justify lower taxation of financial capital than of real estate capital. Yet France has a housing shortfall and many French people are poorly housed . This has led to an abnormal rise in real estate prices , leading to a loss of purchasing power for households that buy a home and to economic rents for those that already own one. More savings should therefore be channelled into financing housing , provided that these additional savings generate additional building in volume terms ( there must not be excessive barriers to construction) and not a rise in house prices ( which would be the case if the savings invested are met with rigid housing supply or insufficient building land). The right policy is not to tax capital in housing but to lift the barriers to construction and then to channel savings into housing investment .