Don't believe everything you read in the papersIf the media are to be believed, it is lack of supply that is driving prices up. But this masks the real issue, and rather cleverly because there is some truth in the “we’re building too few houses” theory.
What drives up the price of anything in any market is: more money chasing each unit of the target (good, service, whatever). Merely building fewer houses than an increasing population wants will not, in and of itself, drive up prices a single dollar. It is the number of dollars chasing houses that is the key.