What explains the biggest housing booms in the OECD?
Ireland and Spain’s over-muscled fundamental Spain and Ireland both greatly benefited from low interest rates, from favourable migration dynamics, and their housing sector has both benefited from (and contributed to) strong local economic growth. By importing the credibility of the European Central Bank, they benefit from low nominal interest rates, in spite of their vivid growth and consequent higher than average inflation. Thus in addition to the global savings glut which exercised downward pressure on nominal interest rates, both countries exhibit very low real interest rates. Up until European monetary integration, both countries used to be European outliers. Both countries had not benefited from the European post-war wealth surge, and had living standard well below the European average. However, membership in the European Union and EMU triggered a strong “catch-up process”. On its current path, Spain will have fully converged with the Euro zone’s big three (France, Germany and Ita
