Mr. Tom O'Connell:

Their analysis would be done on data they had themselves. In fact my reading of the OECD, people have been saying that the IMF and OECD got it wrong totally, they missed it. But actually if you look at the technical stuff in the IMF papers, I think there was annex 1 in maybe IMF 1999. It was pretty clear that they were looking at overvaluations. I think the OECD, this chap van den Noord and somebody else did a special article. They made the point that if ... people were talking about fundamentals in relation to the property market here. But when you think of it, the fundamentals would have been things like peoples' incomes and population and so on. That is fair enough. That drives the demand for housing, but that should not drive the price of housing. If the demand for televisions goes up, for example, you don't expect the price of televisions to go through the roof. In the case of housing, a house can't be produced as quickly as a television set. That is where the zoning issue comes in, because housing has to be somewhat elastic in supply. If it is not, you have got a big price increase when demand increases.

The OECD analysis, I think it was van den Noord and somebody else who wrote the article, I will glance at it again, they pointed out that if you look at the demand for housing and the fundamentals, if in the estimation period for your demand function, if the determining factors are actually themselves influenced by the boom, you are explaining boom prices in terms of boom explanatory factors, but that is not correct. So they went back, because you are explaining boom in terms of booms which is circular.

They went back and said if you abstract from the boom period and you look at the econometric analysis up to, whatever it was, 1998, and you extrapolate further on from that, then, they said, the overvaluation is 50% and I wouldn't disagree with that.