A chair, as Hal David memorably observed, is still a chair, even when there's no-one sitting there.

But, as he went on to point out, equally unarguably, a chair is not a house.

Perhaps that's just as well, since George Osborne might otherwise have felt the need to do something about chairs in last week's Budget. Instead, it was housing he decided to tinker with. The Chancellor said the Government intends to provide £12 billion worth of guarantees for mortgages (which he estimates will allow borrowing of some £130bn), and to expand – fivefold – the Build To Rent fund for new development.

You may recall the global economic meltdown began with the sub-prime mortgage market in the US. If, like me, you have no very high opinion of the economic competence of governments in general, you may further think gambling borrowed money in the property market is a particularly daft move for the state to take on.

Despite Mr Osborne's deliberate echo of the Thatcher government's "right-to-buy" scheme – probably the single most popular and electorally successful policy the Conservatives ever produced – his "help-to-buy" initiative is actually likely to have the opposite effect.

Rather than getting the state out of the housing market, this plan is actively encouraging individuals to borrow money to buy property, with the taxpayer backing the risk. And, as almost everyone immediately realised, there seems to be no reliable mechanism for ensuring this policy will help poor people get into the housing market, rather than benefiting those who already regard property as primarily a way of making money, and not of merely putting a roof over their heads.

It all suggests the Chancellor hasn't noticed anything about the causes of the financial crisis. What landed us in all this trouble, after all, was the ready availability of ridiculous levels of credit; people took this cheap money and spent it on houses, the prices of which rose out of all relationship to any sane value they might intrinsically have had. Then they used the supposed rise in the value of their houses to borrow more money, which they spent on buy-to-let mortgages, so that private landlords could be enriched by the housing benefit paid by the state on behalf of people who (thanks to the lunatic rise in prices) now had no prospect whatsoever of being able to buy a house themselves.

The credit crisis, or the "asset price bubble" that economists identified as its proximate cause, was, in other words, essentially a housing bubble. The oddity about this is that property – indelibly fixed in the British public's mind as the safest possible investment ("safe as houses") – is, in fact, about the least safe investment. Putting all your eggs in one basket is much less common on the Continent, where renting is regarded as normal.

There are probably psychological reasons for the British view that owning your home is essential; we live on an island with a high population density, and we haven't been invaded for almost a millennium – factors that encourage the notion that bricks and mortar are a safe bet. But the prevailing atmosphere of the past few decades, with the assumption that your house will double in value every few years, and that you can therefore treat it as a kind of giant cashpoint, or your pension, has been profoundly damaging.

It is the direct cause of the fact that in the south-east of England middle-class graduates on what would elsewhere be very large salaries are now, on average, well into their forties before they can buy their first house. There are great swathes of London where perfectly ordinary three-bedroomed terraced houses sell for more than a million pounds. Ed Miliband, so keen on characterising Tory ministers as "a government of millionaires", is himself in that bracket purely because of the rise in house prices (his current house is reported to be worth £2.3 million, and he is said to have worked his way up to it by a series of astute moves).

But this absurd inflation in the property market actually does the individual homeowner no good at all unless he or she borrows on the strength of it, or cashes in by downsizing significantly. Meanwhile, an entire generation is presented with the prospect of never being able to buy a house at all.

For obvious electoral reasons, there is no political party which wants to admit house prices in this country are absurdly over-valued. In the US, property prices have fallen by one-third since 2008, yet here they have hardly stalled at all and, in some of the most expensive areas of the country, actually gone up. But if prices were to fall across the board, it would make little practical difference to many homeowners, since people tend to move to homes not wildly different from those they currently own.

If you live in a flat in Fulham which you bought 20 years ago for £100,000, the fact it may now be worth seven times as much does not do you much good if you want to buy a slightly bigger flat down the road. If, on the other hand, you regard it as a nest egg, you'll be congratulating yourself on your financial acuity. But the net result of the British obsession with property has been to distort the market – and in all sorts of areas beyond housing itself.

Areas with good state schools effectively impose selection by house price; the money ploughed into housing benefits supposedly to help the poor does no more than enrich private landlords; mobility in the job market is seriously impaired by the difference in rental costs between the north and south; essential workers are effectively priced out of London, while commuting costs make it uneconomic for many people to take jobs they might otherwise have filled.

The Tories correctly labelled Gordon Brown's programme of unaffordable borrowing and profligate spending as criminally irresponsible. Some observers pointed out, too, that the subsequent meltdown was not a failure of free market capitalism, but an example of markets working to correct an absurd over-valuation of assets which had been acquired with cheap credit.

It beggars belief that the same Government, rather than facing reality and acknowledging the property bubble was part of the problem, should now apparently be keen to get into the sub-prime mortgage racket themselves.