Amol Rajan: The Thatcher home dream has become a nightmare

There was crude electoral logic as well as moral force in Margaret Thatcher's pursuit of a “property-owning democracy”. The phrase was, in fact, coined by Noel Skelton, a Tory MP of the interwar years. He felt, as Thatcher did decades later, that pride in home-ownership would infuse the working-class with conservative values, so deterring them from socialism.

It is true that very few socialists get elected in Britain today – take a bow, George Galloway – but quite why Thatcher's heirs have discarded this belief is hard to account for.

Within barely a generation, we have moved from the goal of a property-owning democracy to something akin to property apartheid.

So when you read a report suggesting the average asking price for a property in Britain hit an all-time high this month, beating the record set nearly four years ago, you begin to think the gulf between the actions of our rulers, and the needs of the people they serve, is getting bigger. In case you are in any doubt, here are five reasons why property prices are national catastrophe: first, expensive homes are a very effective form of distribution – from the needy to the affluent. They shift wealth from those who don't own property (the young and poor) to those who do (the old and rich). Second, they stop people in social housing from moving out of it, creating an even larger shortfall of affordable homes for many extremely vulnerable people. Third, it's extremely expensive: housing benefit costs an awesome £24bn each year.

Fourth, it is a huge source of economic instability, being one of the four booms (the others were immigration, public spending and private debt) that powered the Labour years. Fifth, it accentuates the shameful divide, not so much between north and south Britain, but between London and the rest of the country. One radical solution is to... build more homes. As the Financial Times's Chris Giles argues: "More residential construction would increase the supply of homes and allow their price to adjust slowly downwards. The benefits of job creation, particularly for the young and lower-skilled, are also obvious."

Why hasn't this been done? Two reasons: nimbyism and cowardice. Nimbys should be reminded that 90 per cent – yes, 90 per cent – of English land is green space or water. Cowards have no place in politics.

It seems bizarre to me that a Conservative-led government that is struggling to connect with poorer voters has chosen to unlearn a central, vote-winning tenet of the 18 years their party recently spent in power. Bizarre – and stupid.