There is something about bubbles we don’t understand

According to the Central Statistics Office, residential house prices in Dublin rose 22 per cent in the year to May. The last time Irish house prices were rising so fast was between 2002 and 2005, the years immediately before the crash. This is sparking talks of a new price bubble – mostly, so far, around the dinner table.

That doesn’t have to be a new bubble, and you will note that these prices remain well below their pre-crash peaks.  Still, prices seem to be moving pretty fast in the market.  It remains my view that some regions of the U.S. did not have a real estate bubble at all, and that for these regions it is the price bust which is the anomaly, not the initial run-up.  It is an interesting question what percentage of the world that might hold for.

The FT story is here.


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