Through the first home buyer’s grant, slow land release, tight immigration policy, easy monetary policy and tax incentives the government has managed, for now, to price would-be homeowners out of the market to the advantage of those with mortgages and to the great advantage of those who already own their own homes.

This can’t last forever. Property in this country is massively overvalued. There is no exogenous factor that can explain why homes in the major cities attract on average over 7 times the annual income of the buyers.

Japan experienced a similar situation when it’s bubble in stocks and property failed to burst as the rest of the world went down in the 80′s. Before the millenium was over they’d learned the damage that can be done by irrational exuberance and government “stimulus”.