Dr. Peter Bacon:

The main ingredients were: the relaxation of the interest deductibility measure; the low interest rates - excessively low for the Irish economy which was growing strongly; and the unlimited supply of finance from international banks to Irish banks, a result of the removal of euro exchange risk. They were the ingredients which increasingly fed speculative demand. There are very few laws in economics, but demand and supply is one of them. If supply goes up and prices go up then something funny is going on. That was happening in the Irish housing market. Supply was accelerating, there is no doubt - in one year 90,000 houses were built - yet prices were accelerating. One looks at the population dynamics, that is a bubble.

Supply was accelerating - there is no doubt about that. There was one year in which we built 90,000 houses, yet prices were accelerating. When one looks at the population dynamics, that is a bubble.