Professor Philip Lane:

Of course, when one sees significant run-ups of that order, it is a source of concern. Of most concern is a scenario where it persists.

It is one issue where, in a given period, if there is a surge for some reason, it then self-corrects. Of course, we do not need to go through all of the supply issues which are relevant to this. It is also important to emphasise that, in an economy that is doing very well at the moment in terms of a strong labour market and so on, there is going to be some degree of reasonable house price increase. Let me emphasise, however, that the contribution of our rules is that the dynamic has self-correcting features. The strongest one is the anchor that mortgages cannot be offered beyond 3.5 times a person's income. Therefore mortgages cannot detach from income levels because of that rule. The second feature is the percentage deposit requirement. It is 10% for first-time buyers, 20% for second-time buyers and 30% for buy-to-let. As house prices go up, those deposit requirements become more demanding, and that is a self-correcting feature.

As regards the help-to-buy scheme, when asked last year, I said that one could make the case that there might be some gains to boost supply by easing the ability of new home builders to access finance. Of course, in the short term that takes time to kick in with a demand effect.

The second point, which is ultimately for the political system, is the distribution element. If one is offering up to a €20,000 rebate for this category, is that the best use of that funding and what else could one do with it? However, it is for the Oireachtas to rank what are the best interventions or best uses for these tax rebates.