We in the UK have some of the highest house prices in the world – but does that really mean we’re richer? There is a paradox here. Our house prices are high because there is a constraint on the supply of houses. If overnight we could construct a million houses in the right locations, which would increase our housing stock by about 4%, we might assume that the nation’s wealth would increase.

But such a sudden increase in housing supply would probably lead to a collapse of prices in the entire housing market – and lead to a reduction in our national wealth even though there were 4% more houses.

This paradox lies at the centre of our national obsession with the price of houses. We feel rich when house prices are rising and tend to borrow more against them to finance fancy cars and holidays. But at the same time we forget the obvious: that apart from a lucky few with castles in the country, higher prices force us to live in smaller and poorer houses that we would like to live in.

In this context, higher house prices make us poorer.