Professor Philip Lane:

I will outline a number of reasons for Senator O'Donnell. One is that the economy is growing. Employment is growing quickly. More people are looking to buy homes. Of course, with the dysfunctional rental market, many people are looking at high rents and are concluding that even though houses are expensive, buying is what they believe they should do. It is part and parcel of the wider housing supply issue.

Of course, it is still the case that we live in a low interest rate world. Certain people, especially those who take out a long duration mortgage of 30 years or so, are calculating that some of these levels are affordable. However, this applies to a limited group. What we are seeing is that only people on decent incomes are able to buy houses. That is essentially why it is not part of the overall solution. What we need is affordable housing. That is the core focus.