Changing forms of financial intermediation are expected, given higher volatility and less leverage, in some cases building on old-fashioned banking products. Commercial and thrift deposits, for example, backed by a loyal customer base, may offer greater franchise value. Investment banks may reconfigure capital structures and core trading businesses to maximize benefits in a higher volatility environment.
The reason for that is that the supply side of the market is dominated by a large existing stock of dwellings, and new supply takes time to come on stream. In the longer term, however, supply factors are critically important. It is the supply response that determines the extent to which additional demand results in higher prices over time.