Bingo. I do wonder why people insist on seeing house price inflation as being solely caused by rising value of houses - due to increasing demand, constrained supply ... kitchen renos? - without acknowledging the role of the falling value of money - increased supply via deregulated debt creation, artificially low interest rates and QE.

The capital gain on housing then becomes a self-reinforcing loop as capital seeks yield in a low interest rate environment, and investment flows towards these unproductive assets instead of creating productive capacity. Regular buy-to-inhabit buyers are dragged along in the cycle as long as they can obtain sufficient credit.

In a system like ours (the world's that is - I'm not American) where money is created when banks write loans, debt increases more quickly than the money supply (because debt has interest, money doesn't, and in a housing boom relatively little new real value is being created). So the debt can never all be repayed, and at some point there must be a financial crisis.

Unless this time is different?