The Central Bank's decision to cap mortgage lending was a courageous and well-timed master stroke.

The impact of the caps has been exaggerated, but the significance has been missed; the Central Bank has become the first arm of the State to ever attempt to push down prices. All previous housing measures have been aimed at inflating prices to ingratiate governments with the property-owning classes - and we all know how that ended.

The impact of the new caps won't be significant, because there are already de facto caps in place for most home buyers. Anybody who has taken out a mortgage in the past few years knows lenders are already demanding deposits that equate to somewhere between 10pc and 20pc of the cost of a house.

About 18,000 mortgages were taken out last year, with around half of these being first-time buyers.

Central Bank governor Patrick Honohan calculated yesterday that the new measures would have affected about a quarter of first-time buyers and a third of trader uppers. That equates to perhaps 5,000 individuals or couples; a small number considering all the hullabaloo.

Buying a house these days is an excruciating process which will leave even the calmest person wrapped in red tape and apoplectic at times. That won't change, but it won't get worse either.

This is not to deny that some home buyers will suffer, but many are suffering already as house prices here continue to rise faster than anywhere else in the world. Complaining about the deposit requirement jumping from 10pc to 20pc for a small number of people makes little sense when house prices are rising six times faster than the eurozone average. It is these increases in asking prices that are really pushing houses out of the reach of home buyers, not an inability to borrow to pay.

While the debate centres around the alleged effects of the mortgage cap on home buyers, the real "victims" are home owners who will see the value of their homes stagnate or fall in future.

That won't happen immediately because there is too much momentum in the market at present, but it is inevitable.

Falling prices makes little difference to those who own their homes outright, or who don't intend to move, but it will hurt those who have recently come out of negative equity and will now slide back into negative equity again.

That not insubstantial group of people contains many of the real potential losers from all these changes.

Their hopes of selling to trade up appear to have been dealt a blow.

The word "appear" is important here because we don't know exactly how the Central Bank measures will affect those in negative equity and we don't know how the main banks will respond to the Central Bank's new mortgage caps. Falling house prices will act as an incentive to many banks to cut deals.

This is not the only thing we don't know. The real problem with trying to assess the wisdom of the Central Bank's new measures is that we don't know what else, if anything, is coming down the tracks. The regulator can only ever be part of the solution to the housing crisis in many of our cities. We now need political measures as well. This could include cutting the Vat and other levies on new houses, which can account for almost 40pc of the cost of a house.

Other potential reforms to address the supply issue include changes to planning laws or tax incentives to help people save. Government has plenty of options to make it easier for developers to build homes and for people to buy them. The list is not quite endless, but it is extensive.

The position of the developer in Irish society is a strange one. It is difficult to think of a country or era where developers have been more lionised than Celtic Tiger Ireland. The fawning was bad, but the present vilification that makes 'property developer' a synonym for crook is equally ridiculous.

It is also insidious because it makes it impossible for politicians to say publicly that developers are an important part of the solution to the housing crisis. Neither the State nor individuals can build houses cost-effectively in urban areas; we need developers who have the experience, guts, money and land to build houses.

While the rehabilitation of developers will be hard to stomach for many, even harder will be the acceptance that high house prices are bad rather than good news.

Even the Central Bank seemed reluctant to admit yesterday that the mortgage cap will depress prices, but it is time that we admitted to ourselves that house prices are too high and low prices are a good thing. Low prices mean a better quality of living; more money to spend on food and holidays and more money to save for retirement. High prices are an obsession in the English-speaking world, but they are a financial nonsense; tying up capital and preventing banks from lending cash to businesses to invest in companies that create jobs and profits.

If the Celtic Tiger has taught us anything, it is that high house prices are a sign of economic vulnerability rather than virility. The Central Bank has begun the unpopular job of dampening prices.

Now it is time for politicians and society as a whole to finish that job.

Irish Independent