Dr. Dan McLaughlin:

I'm not familiar with that paper but the fact that there were previous banking or property crises, of course I was familiar with those. Most of the crises occurred in high inflation periods where the price falls were significant falls in real house prices not in normal prices. I would argue, and I said in my opening statement, that I think you can explain a lot of what happened in the Irish residential property market up to around 2005 in fundamental terms. There's not many economies in the western world that have an 18% rise in their population in ten years, so obviously there was a massive increase in demand for housing. There's not many economies that grew by 9% per annum between 1994 and 2000. There's not many economies that grew 5.5% between 2000 and 2007. So we're talking at a time when employment was rising very rapidly, population was growing very strongly so I think ... and they other thing I think which one should bare in mind which is ... I think pretty obvious, but most people don't seem to think it has any relevance, is that Ireland joined the euro. And we went from a relatively high interest rate economy to a very low interest rate economy. Sweden didn't do that or any of those other countries didn't do that so anyone who looked at any economic analysis or any theory of finance would suggest that if you ... if your average interest rate is 7% or 8% and it becomes 3%, asset prices will rise. So all of those factors should be taken into account.

I think if you look at the Central Bank's quarterly survey of credit standards, which is done by the ECB all through Europe but the Irish Central Bank publishes the Irish one. It's only in 2005 that you get credit standards loosening, I think. Then I think it becomes much more credit driven. So the last ... '05, '06, particularly '07, I think were not driven by fundamentals. I think there was more of a credit driven element to it. This committee, over the last few days, has been discussing for example the introduction of 100% mortgages for first-time buyers which, if I recall, I think it was in 2005. So I think it is only over the last two or three years of the boom that we can say there was a bubble element came in. But also, in 2007, most people, including myself, were saying the housing market would slow down. Okay we weren't saying it was going to crash, but we were saying it was going to slow down. You look at all the forecasts that were produced, everyone thought that house completions would fall. By the way, is there a shortage of housing now?