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Is There an East European Housing Bubble?


  • Shelburne Robert C.

    () (United Nations Economic Commission for Europe)

  • Palacin Jose

    () (United Nations Economic Commission for Europe)


This study examines residential house price trends in the East European economies. The data are described and evaluated in terms of their quality and reliability; both official data from national statistical offices and that compiled by real estate companies are used. Current prices are evaluated in terms of the economic fundamentals in the region including GDP growth rates, interest rates, rental prices, alternative asset prices, and the availability of mortgages. The role of foreign currency mortgages is given special treatment given their importance in a number of countries and the vulnerabilities they introduce. For some of the markets a more detailed description of price trends by region or type of property is provided. Comparisons with western markets are made where appropriate. Generally it is concluded that price increases have been quite significant but any over appreciation is difficult to evaluate given the very positive changes in the economic fundamentals. In addition to price trends, the implications of the changing institutional structure of these mortgage markets are explained along with the implications of the housing market developments for consumer spending, fiscal and monetary policy. The possibility of a housing bubble and bust is examined along with its implications for the economy; policy options to minimize this likelihood and its consequences are also explored with due consideration of the limitations on macroeconomic policy options given the constraints imposed by euro accession in a number of the countries.

Suggested Citation

  • Shelburne Robert C. & Palacin Jose, 2006. "Is There an East European Housing Bubble?," Global Economy Journal, De Gruyter, vol. 6(3), pages 1-39, September.
  • Handle: RePEc:bpj:glecon:v:6:y:2006:i:3:n:1

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    References listed on IDEAS

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    Cited by:

    1. Andrew Cook, 2010. "The Expatriate Real Estate Complex: Creative Destruction and the Production of Luxury in Post-Socialist Prague," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 34(3), pages 611-628, September.
    2. Highfill Jannett, 2008. "The Economic Crisis as of December 2008: The Global Economy Journal Weighs In," Global Economy Journal, De Gruyter, vol. 8(4), pages 1-7, December.
    3. Naude, Wim, 2009. "The Global Economic Crisis after One Year: Is a New Paradigm for Recovery in Developing Countries Emerging?," WIDER Working Papers UNU-WIDER UNU Policy Brie, World Institute for Development Economic Research (UNU-WIDER).
    4. Naude Wim, 2011. "Global Finance after the Crisis: Reform Imperatives and Vested Interests," Global Economy Journal, De Gruyter, vol. 11(2), pages 1-22, July.

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