mises.ca / by With London England the new place to be for oil-rich Russian oligarchs and Middle Eastern sheiks, the question going around is whether house prices are in a bubble. Despite a brief blip down with the credit crunch in 2007-08, prices are back and higher than ever.
The ever-entertaining Tim Harford chimed in recently with a very sensible opinion that economists have a very difficult time identifying what, exactly, constitutes a “bubble.”
One way to look at whether prices are “fair” (short of the obvious answer that “they must be if someone is voluntarily willing to pay the price”) is to look at the price of the foregone alternative.
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