With house prices being allowed to creep so high, is the government deliberately trying to make it almost impossible for first time buyers to get on the property ladder?
The major thing it could do to encourage prices to reduce is to abolish (or significantly weaken) the planning restrictions. With rampant NIMBYism I can't see that happening.
It is in the treasury's interests to keep house prices high. EG Stamp duty, inheritance tax, council tax.
It also, indirectly puts money into the economy, as people 'release equity' from their properties. I think this effect has probably been the biggest single factor in alleviating the recession in the UK over recent years.