Professor Patrick Honohan:

One factor that needs to be taken into consideration is that house prices which I accept have come down a lot are still miles above, scientifically, where they were in the boom of 1977 to 1979 after rates were abolished. They came down in the 1980s. They have gone up again and not come down anywhere near these levels. A larger portion of the population is now in the business of trying to finance a much higher level of prices. Part of the reason this price level is so high is the ready availability of credit until 2007. The credit driven economy brought prices up. They came down after 2008. They are back up to some extent, but they are still high. I am not saying they are higher than what can be sustained, but they are much higher than they were in the 1970s and 1980s, the period to which the Senator is referring. Then people were able to afford to pay and service loans because they were not very high.