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mpc: 18 There were two possible, not mutually exclusive, explanations for the rises in house prices. First, the equilibrium house price-earnings ratio might be higher than the Committee had thought, even though the Committee had revised its estimate upwards significantly in 2002. There were good reasons why that ratio might have risen, but it was necessarily very uncertain. Low interest rates had reduced the cost of borrowing and the burden of `front-loading' of repayments; the growth in the number of households was outstripping a constrained supply; and there was some evidence that the equilibrium demand for housing as an investment asset ­ in particular, as a means of saving for retirement ­ might have risen. Second, prices might have been driven up by expectations about the size and persistence of future price increases. Even if some of the price increases were unsustainable, however, they need not reverse suddenly; they might instead unwind gradually. That would depend on whether a change in behaviour was triggered by some external shock to the household sector and, if so, on the nature of that shock. The experience of other countries that had had rapid house price increases did not offer clear guidance: in some countries, such as the Netherlands and Australia, house prices had slowed but not fallen, whereas in Hong Kong and Japan they had dropped considerably below peak levels.