Dr. Ronan Lyons:

Every economist in the country shed a little tear when the Minister for Finance spoke about tackling supply by boosting demand. It is such a basic error in economics. Let me use the analogy of dousing a fire with fuel instead of water and hoping the fire brigade comes along. It is the worst way to tackle the problem so I favour credit rationing. My research suggests that if one increased the loan to value a first-time buyer receives by 5% then one will increase house prices by 10%. Therefore, going the other way should have a similar effect on dampening house prices. A phasing-in period needed. My preference is for a 1% increase per year so that means it will increase from 15% in 2015 to 20% in 2020 which would get us to where we need to be. It would mean people in their early 20s would know they must save. It also gives scope to people who are thinking about buying next year but do not have a 20% deposit.