Thus, if investors believe that credit will be abundant in the future, this will drive up prices today. The introduction of the macro prudential measures seems to have led buyers to realise that a repetition of the seemingly uncontrolled expansion of credit, including to borrowers that were not creditworthy, that played a central role in the last boom, will not be permitted to reoccur.
With expectations of future prices being scaled back, the demand for housing is reduced now and prices grow more slowly. Overall, the measures may have thus removed the speculative element. This is most evident in the moderation of future house price expectations which has occurred since the introduction of the measures, as reported in survey evidence.