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A consensus appears to be emerging across the housing market. With volumes up and prices now increasing, all that is preventing a full-blown recovery is the behaviour of nasty banks who seem to be restricting lending to first-time buyers.

Those beseeching the banks to lend more freely should bear in mind one important fact, as outlined by Robin Hardy in this magazine (26 June, page 21): they can鈥檛. Banks are lending at a rate equivalent to 350,000 mortgages a year, only slightly less than at the height of the boom. So while many commentators would have you believe we are in a period of unusually tight conditions, it looks more like a return to 鈥渘ormality鈥�.

The delusion that a lack of lending is the only thing preventing business as usual is not confined to industry commentators. In some government circles, I hear, talk of a 鈥渂ubble鈥� is anathema. Previous price rises were explained as a mismatch between supply and demand and this dip is put down solely to a lack of finance.

Typical of this attitude is the latest report from the National Housing and Planning Advisory Unit. It states: 鈥淲hen mortgage rationing is removed, house prices are likely to return quickly to the levels they would have achieved had there been no rationing.鈥�

It also suggests that only a massive increase in building can stabilise prices. It invites us to look abroad for evidence that 鈥渞apidly rising house prices are not inevitable鈥�.

In Germany, Sweden and the Netherlands, price inflation has been muted. However, there is no sign that this has been achieved by increasingly supply substantially 鈥� they have all provided new homes at levels only slightly higher than those in the UK.

Meanwhile, the US, Spain and Ireland have undergone enormous building booms 鈥� but have, somehow, experienced levels of house price inflation no less dramatic than the UK.

The real difference appears to be between markets where a 鈥渇oot on the ladder鈥� must be obtained at any cost, and those where people are happier to rent, which seem more stable.

Home ownership levels in the UK are among the highest in the world. Attempting to get stability in prices through increasing the supply of homes for sale means creating more owner-occupiers and, presumably, more securitised mortgage debt. And as charities such as Shelter have pointed out, this implies granting credit to many who should not be exposed to the risk of highly cyclical markets.

We do need to build a lot more homes, but aiming them all at owner-occupation may well be setting the scene for a domestic version of the US sub-prime debacle.