What drives price rises? On the demand side it is mainly low interest rates, low unemployment, rising incomes, increased migration, and expectations of future price appreciation. And on the supply side, new building is constrained by planning and zoning restrictions as well as the time it takes to build. The flaw in the picture though is those five words above, expectations of future price appreciation. In any asset market, whenever price appreciation becomes the main reason for people buying, the market is in danger of becoming a bubble. We must suspect a bubble if homeowners are regarding housing primarily as an investment, rather than as a place to live, and if investors are paying little attention to rental yields and are focused mostly on capital gains.