Dr. Robert Kelly:

I agree with everything Dr. Cassidy said. There is a more fundamental point we need to look at about whether we want to interact on the demand side or the supply side. If we increase the leverage to all borrowers through 100% loan-to-value loans or any other mechanism, that will just filter through to house prices. It is not as if people will be able to buy a house they could not buy last week because if everyone has more credit, it just pushes up the house price. We need to understand that if we want policies that work on the demand side, giving borrowers more money, a lot of that will just push up house prices. We advocate much more on the supply side. The big factors and where the bang for buck is in terms of Government spending and interventions is on the supply side rather than how it is done through the demand side.