The unprecedented global housing boom of 1995-2006 is now unwinding. It has affected almost all advanced economies and a very significant number of emerging economies. Housing prices have even accelerated during the period 2002-2006. What were the global structural factors that have been driving these synchronized national housing booms? How did the low-interest rate era and the high rate of mortgage innovation induce significant behavior? A historically unprecedented global housing boom is now unwinding. The financial crisis that has erupted in August 2007 marks the end of a major global credit cycle that has significantly benefited the growth of the housing sector and mortgage markets in most advanced OECD economies and in a large number of emerging economies as well. For several years, central bankers, bank regulators and economists monitoring global financial markets had worried about the widespread under-pricing of risk (BIS 2005 and 2006; IMF 2005). A financial crisis was seen as an accident waiting to happen somewhere in the global financial system. Opaque hedge funds were often mentioned. The actual trigger has been the US subprime mortgage market. changes among households and transformed mortgage markets? Why did these housing price booms differ between “global cities“ and the others, and what has been the impact on the affordability of housing?

In what way did poor regulation and supervision of US subprime lending innovations lead to a debacle? Why did US non-performing subprime loans trigger a much wider and deeper structured finance crisis? What are the prospects for the unwinding of this first global housing boom in different countries and for the global economy? The global boom of 1995-2006 marks a new era for housing. Early analyses of the global boom by the Bank of International Settlements, IMF and OECD (BIS 2005 and 2006; IMF 2005; Girouard-OECD 2006) revealed increasingly correlated housing price increases among most – but not all advanced economies that became very significant during the period 1995-2001. They also showed that housing prices in many countries accelerated further during 2002-2006.