This panel examines the diversity of housing regimes in Europe and explores why some countries have experienced housing bubbles while others have not. The current debate on housing market structures and bubbles is influenced by the literature on the asset-based welfare state. The literature on the asset-based welfare state speculates that governments encourage home ownership in order to force people to build up assets that can be tapped after retirement. If households have housing assets/capital gains when they face retirement, the state can scale back pension provision, because people will have sufficient savings in post-retirement to look after their own selves. In order to foster and expand home ownership, governments relaxed home financing rules and indirectly contributed to greater mortgage debt. In these cases, housing markets became more susceptible to bubbles and to crashes. The main examples are the UK, U.S., and Australia, but the Netherlands and Denmark also both experienced sharp declines in housing prices after 2008.

This panel investigates why a diverse group of countries -- Denmark, the Netherlands, Spain, Ireland, and the Anglo-Saxon countries -- seem to experience inflated home prices when neighboring countries, such as Italy, Finland, or Germany, do not.  In addition, many of the discussions on asset bubbles ignore trends in Central-eastern Europe. However, some of the same forces – imbalances in global surpluses and deficits -  that contributed to housing bubbles in Southern Europe also played a role in in some though not all East European countries.