Housing Bubble

Glossary

Banking

Housing Bubble

A housing bubble is where prices rise continually and quickly beyond the point that might be considered rational. Causal factors include an over-supply of buyers, speculative buying, the lack of alternative investment opportunities, and access to cheap capital. It is referred to as a bubble as prices are vulnerable to collapse – a bursting of the bubble – if any of the underlying conditions change. The Global Financial Crisis of 2007-08 was fuelled by the bursting of the US housing bubble.

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