This article reviews the background to Colombian housing and construction sector policy from the 1970s to recent times. Based on a supply and demand analysis the text offers a theoretical explanation of the current problems of the housing market in Bogotá. Based on a literature review and an examination of such variables as production, prices, mortgage credits and constructed area, it is suggested that a focus on promoting demand for housing has produced negative effects on prices and on urban development in the city. Consequently, the article synthesizes the principal obstacles to consolidating a sustainable housing policy, while at the same time highlighting the importance of considering alternative policies based on improving existing stock and building in appropriate places, using to criteria designed to guarantee economic efficiency and social dignity.