It is these choices that have underpinned the high level of housing prices. So the changes that we have seen in these ratios are largely structural. Recently, the ratios of housing prices and debt to household income have been increasing again. Lower interest rates both in real and nominal terms – this time, largely reflecting global developments – have again played some role.
Our experiences in the past crisis has shown that even the most dynamic economies are vulnerable. In spite of the judicious macroeconomic policies that we adopted and the structural adjustments that we carried out, the development gains that we earned over decades could crumble in the span of a few weeks. The severe crisis proved that our banking system had some structural weaknesses.