Yes, prices are going up because of the demand--supply mismatch. But that is only half of the answer. The other half is that there is a demand--supply mismatch because prices are going up. The classical bubble scenario driven by expectations. Prices don't increase by 20% year over year simply because population growth.
Banks make a lot of money by issuing ever-growing mortgages. So when banks start issuing warnings about the housing market, we'd better take them seriously.