Could this have been alleviated somewhat by changes to the tax system?<p>The increase in price that occurred as a result of the new loans is an excellent example of unearned economic rent, i.e. the owners of the now inflated real estate did nothing to generate value. Thus, the tax system should be structured to capture that inflation via capital gains tax.<p>Obviously, this would be most unpopular amongst real estate holder. Everyone loves being a petit rentier because, something for nothing.<p>The other necessary component is prudential regulation. Loans for mortgages need to be constrained by loan-to-personal_income, loan-to-rental_income and price-to-rental_income ratios to control the flow of inflationary credit.