Professor Alan Ahearne:

I agree that unsustainable increases in house prices, or bubbles, are bad. One of the things that added to this situation was the reduction in capital gains tax. That meant the profits for people buying and selling land were taxed at 20%, which was extremely low. That situation added to the incentive to speculate in property and, therefore, was extremely damaging. If land is going to be used for buildings then it should be used to build houses at a reasonable cost. In terms of policy, that was certainly a contributory factor and a problem.