Housing Standards 2007/2008:
The Factors behind the High Prices of Owner-Occupied Housing in Prague

1. An international comparison of price trends for residential real estate

The first chapter of the analytical part of the study focuses on a comparison of price trends for residential real estate in selected OECD countries. The analysis drew on data from the Bank for International Settlements (BIS), the OECD, and from ‘national’ sources (i.e. statistics offices, central banks, real estate agency associations, and so on). This chapter also contains a detailed analysis of the causes of the American mortgage crisis. A comparison of price trends revealed that from the mid-1990s to 2006 many advanced countries experienced record high increases in residential real-estate prices. This phenomenon created fertile ground for a justified discussion of its sustainability and the possibility that the trend in residential real-estate prices became a part of the ‘global’ price bubble, which is at risk of bursting or of experiencing a long-term and profound price correction, such as that already being experienced, for example, in Germany and Japan, where residential real estate prices fell (or are still falling) for more than 15 years, and the question is when or whether it will ever return to its original real value. However, 2007 marked a turnaround and in many economies around the world years of dynamic growth were followed by a fall in prices or at least a significant reduction in price increases; this is particularly evident in countries like the US, Ireland, and in the final months of 2007 also in Great Britain.