Low interest rates and favourable tax treatment added to the attraction of investing in an appreciating asset. The positive side to this was that the strong demand by investors helped underpin the extra construction activity needed to house the growing population.
But the rigidities on the supply side, coupled with investors' desire to benefit from a rising market in a low interest rate environment, amplified the price increases. As I discussed earlier, there is an internal dynamic to housing price cycles, and this one is no exception.