With the outbreak of the “sub-prime” crisis the attention of policymakers has been focused on the US housing market. It is by now common knowledge that the problem started with a bubble in US house prices. However, it is not widely appreciated that in Europe housing prices have also increased over the last decade and, in many cases, even more than in the USA. The same has happened in a number of other OECD countries and emerging markets, where rapidly increasing incomes have put pressure on house prices.
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