User:Nick Gardner /Sandbox: Difference between revisions

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In response to the increase in demand there were almost unprecedented increases in house prices in several countries. In the United States  real (inflation-corrected) prices rose by nearly 85 percent between 1997 and 2006<ref>[http://jec.senate.gov/archive/Documents/Reports/10.25.07OctoberSubprimeReport.pdf ''The Subprime Lending Crisis'', US Senate Joint Economic Committee, October 2007]</ref>, in the United Kingdom there was an (uncorrected) rise of 180 per cent <ref>[http://news.bbc.co.uk/1/hi/business/6090972.stm BBC news 2006  Friday, 27 October 2006]]</ref>, in Spain they nearly trebled<ref>[http://www.spainrei.com/MiV-Spain-Property-Prices-95-07-yearly.htm ''Spain Property Prices 1995 - 2007'', Ministerio de Vivienda, 2008]</ref>, and in Ireland they more than quadrupled <ref>[http://www.imf.org/external/pubs/ft/wp/2010/wp1057.pdf  Daniel Kanda: ''Asset Booms and Structural Fiscal Positions: The Case of Ireland'', International Monetary Fund, March 2010]</ref>.
Many economists argue that house prices have risen too far too fast in many markets, forming a bubble that could rapidly collapse and trigger an economic downturn, as overinflated stock prices did at the turn of the century
currently chairman of the president's Council of Economic Advisers, in testimony to Congress's Joint Economic Committee. But these increases, he said, "largely reflect strong economic fundamentals," such as strong growth in jobs, incomes and the number of new households. <ref>[http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html Nell Henderson: ''Bernanke: There's No Housing Bubble to Go Bust'', Washington Post, October 27, 2005 ]</ref>
House prices have risen by nearly 25 percent over the past two years. Although
speculative activity has increased in some areas, at a national level these price increases
largely reflect strong economic fundamentals, including robust growth in jobs and
incomes, low mortgage rates, steady rates of household formation, and factors that limit
the expansion of housing supply in some areas. House prices are unlikely to continue
rising at current rates. However, as reflected in many private-sector forecasts such as the
Blue Chip forecast mentioned earlier, a moderate cooling in the housing market, should
one occur, would not be inconsistent with the economy continuing to grow at or near its
potential next year.
<ref>[www.house.gov/jec/hearings/testimony/109/10-20-05bernanke.pdf  Ben Bernanke: ''The Economic Outlook'', Testimony to the Joibt Economic Committee  October 20 2005]</ref>
<ref>[http://papers.ssrn.com/sol3/papers.cfm?abstract_id=991107 Robert J. Shiller: ''Historic Turning Points in Real Estate'', Cowles Foundation Discussion Paper No. 1610, NPR news, June 2007]</ref>
<ref>[http://www1.worldbank.org/finance/html/database_sfd.html ''Bank Crises Database'' World Bank 2003]</ref>


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