Dr. Conor O'Toole:

The wider context is critically important in understanding the economics around these types of interventions. As I have mentioned, the housing market has many co-determining factors, such as the level of credit market access with supported schemes and broader lending activity by the general banking sector and the demand side, labour market and supply channels. Ultimately, the overall impact on inflation would be a combination of all of these factors. They all co-determine the degree to which house prices will move up or down over the coming years.

It is important for us to understand their varying impacts over time. It is very difficult to stand here today ex anteand say what the impact of any one scheme would be before it has taken place. In a sense, we need to think about the benefits and risks. As I said in the statement and discussion today, where there are interventions to provide credit constrained households with the finance to make transactions, those policies certainly have merit. There is a role for them where they can be clearly identified to help with the deposit or income channel. Our research is clear on that.

In terms of the risks with these policies, in general with any intervention on the credit market side where there are rises in purchasing power and supply is limited in the short run, the tendency is to have upward pressure on the demand side. That can be offset by changing other components on the supply side, and that may alter the market. It involves a combination of factors that all affect each other. The outcome is the price of inflation in the market.