From China to Canada and London, fast-rising property markets are haunting the global economy again, five years after the U.S. subprime mortgage bubble burst and triggered the worst financial crisis since the 1930s.
For now, house price inflation is neither as high nor as widespread as it was in the middle of last decade. Except in a few cases, the warning signals are flashing amber, not red, and several countries have acted to cool overheating markets.
But the confidence of policy makers that they can avoid another generalized boom and bust could be tested if central banks keep pumping out nearly free money to support economic growth by encouraging investment in riskier assets such as equities and property.
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Plentiful cheap credit is just one more inducement to home buyers who, in many countries, can deduct mortgage interest from their taxable income or are exempted from capital gains tax when they sell their house, said Andrew Oswald, a professor of economics at Warwick University in Britain.
"We're stoking up a huge bubble. It's quite extraordinary. We virtually ruined the Western world by having high house price inflation and now we're determined to do it again," he said.
On the face of it, the reacceleration in U.S. house prices spells trouble.
According to the National Association of Realtors (NAR), the national median home value at the height of the bubble, in July 2006, was $230,400. In July 2011, the median price was 25.7 percent below that peak. By July this year, it had climbed back to within 7.3 percent of the high water mark.
Yet some of the engines of the price recovery are spluttering. Most importantly, mortgage rates have risen as markets anticipate an end to the Federal Reserve's bond buying.
Robert Shiller, the co-creator of the S&P/Case-Shiller Home Price Index, said higher borrowing costs could limit U.S. house price gains in 2014 to roughly 6 percent. The index rose 12.8 percent in the 12 months to August.
"The U.S. market might be cooling," Shiller told Reuters. "I think prices will keep going up for a while. There is still momentum, but it may fade and turn down in the next year or two."
Higher interest rates are also causing cash buyers to pull back. According to Goldman Sachs, in 2012 and the first half of 2013 fully 60 percent of home purchases were all-cash transactions—double the pre-crash figure—as Wall Street and foreign investors swooped in on distressed markets.
Family buyers are taking up some of the slack. But the speculative frenzy that marked the go-go years of the mid-2000s is missing. Banks have tightened mortgage standards, while the jobless rate is a lofty 7.2 percent and wages are stagnant.
In Las Vegas, prices have rebounded 29.2 percent in the past year, but Gregory Smith, a local real-estate agent, said the market was now cooling off.
"More families are starting to get their offers accepted, as the investors retreat. These are real buyers who intend to stay in the homes long-term. We are in a flattening-out phase," he said.
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All about incomes
To assess property market risk, house prices need to be gauged in relation to income.
Whereas the U.S. price-to-income ratio at the end of 2012 stood at 84.3, measured against a rolling long-run average of 100, the ratio in Canada was at a 10-year high of 131.7, according to the Organisation for Economic Cooperation and Development.
Moreover, Canada's debt-to-income ratio reached a record high of 163.4 percent in the second quarter.
"Debt is at record levels, and we know consumers are biting off more than they can chew financially, so does this lead to more problems down the road?" asked Laurie Campbell, chief executive at Credit Canada, a credit counseling agency.
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The same question is being asked across Asia. As mortgage rates return to pre-crisis averages, monthly housing payments in most Asian countries will rise by 15 percent to 25 percent, according to David Carbon, an analyst with DBS, a Singaporean bank.
But he said Asia's housing debt as a percentage of GDP remains much lower than in America. And home prices in Asia are now 22 percent lower, relative to incomes, than in 2000.
"By this gauge, Asia has little to fear on the property front—homes are become more affordable, not more expensive," Carbon wrote in recent report.
Even in China, prices are 40 percent more affordable on average than in 2000, according to DBS.
But the average masks vast discrepancies in China, where the government is concerned about a bubble and the potential for social unrest as inequality over access to housing grows.
Prices nationwide rose on average by 9.1 percent in the year to September but surged 16 percent in Beijing and 17 percent in Shanghai.
"There are overheating signs in Tier 1 cities. The central government should take some measures, at least including stricter implementation of existing measures," said Wang Juelin, a former senior housing ministry researcher.
Demand by Chinese buyers has helped boost Hong Kong prices by 120 percent since 2008.
Hong Kong responded last October with a 15 percent tax on overseas buyers and in February imposed higher stamp duties and home loan curbs.
As a result, the premiums for new homes over existing homes that developers seek has shrunk to about 20 percent from 50 percent to 80 percent, according to Thomas Lam, head of research for Greater China at real estate firm Knight Frank.
Pre-emptive strike and bottlenecks
Singapore has also increased stamp duties and capped how much people can borrow relative to their income. New Zealand has clamped down on mortgage lending.
In Australia, house prices rose 5.8 percent in the year to mid-September, but Phil Chronican, ANZ Bank's local chief executive, said concern about a bubble was overstated, partly because the market had been subdued for so long.
"To stop this demand exacerbating the rising price trends, though, we need to see a supply response," he said. "We need more houses and apartments."
Supply constraints, notably strict planning rules, are also contributing to surging prices in London, where high-end property has been in demand from well-heeled foreign investors.
Richard Donnell, research director at property analysts Hometrack, said it was tough to set a rational price benchmark for London given the differing motives of foreign buyers.
Prices in the capital rose 9.4 percent in the year to September, according to Land Registry data.
"At the moment it looks like prices are going to keep on going up. But it's impossible to know what will change sentiment," Donnell said.
Warming up, but not red hot
The British government has launched subsidized mortgage schemes to galvanize housing ahead of an election in 2015, but Donnell said there was no nationwide bubble.
Prices rose 3.4 percent on average in the year to September, government figures show, though mortgage lender Nationwide said property inflation hit a three-year high of 5.8 percent this month.
The picture in Europe is one of stark divergences.
The International Monetary Fund has expressed concern about high prices in Norway and the Bundesbank grabbed headlines by warning that apartments in Germany's biggest cities could be overvalued by as much as 20 percent.
In countries such as Ireland, Spain and Denmark, by contrast, price-to-income ratios have slumped since the peak in 2006/2007. Prices have also been tumbling in the Netherlands because of uncertainty over the future of generous tax breaks.
Generalizing about a global asset class when conditions vary from country to country is treacherous.
In Japan, the cost of residential land—a proxy for property prices—is still 50 percent below its 1991 peak but new condominiums in Tokyo are selling briskly.
At Skyz Tower & Garden, an apartment building near the site of the athletes' village for the 2020 summer Olympics, the first 820 units went on sale in August and are almost sold out.
Buyers probably expect Prime Minister Shinzo Abe's economic policies, which include a doubling of Japan's monetary base, to push up prices and lead to higher interest rates, said Ryo Hashimoto, head of the condominium's sales team.
For advanced countries as a group, house prices were now 'appropriate' considering historically low mortgage rates, according to ABN Amro, a Dutch bank.
"We are getting to a new phase where regular, middle-class families can purchase again," said Madeline Schnapp, an economist with PropertyRadar.com, a California firm. "But unless jobs get moving and incomes begin to rise I don't think we are in danger of any sort of bubble."