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KEITH HENNESSEY, DOUGLAS HOLTZ-EAKIN, AND BILL THOMAS 

House Price Appreciation in Selected Countries, 2002-2008
The United States was one of many countries to experience rapid house price growth

2002 INDEX = 100
United States United Kingdom Spain
200
192
158
150
118
100
’02 ’04 ’06 ’08 ’02 ’04 ’06 ’08 ’02 ’04 ’06 ’08

Australia France Ireland
200

168
152
150
142

100
’02 ’04 ’06 ’08 ’02 ’04 ’06 ’08 ’02 ’04 ’06 ’08
SOURCES: Standard and Poors, Nationwide, Banco de España, AusStats, FNAIM, Permanent TSB

• The report largely ignores the credit bubble beyond housing. Credit spreads de-
clined not just for housing, but also for other asset classes like commercial real
estate. This tells us to look to the credit bubble as an essential cause of the U.S.
housing bubble. It also tells us that problems with U.S. housing policy or mar-
kets do not by themselves explain the U.S. housing bubble.
• There were housing bubbles in the United Kingdom, Spain, Australia, France
and Ireland, some more pronounced than in the United States. Some nations
with housing bubbles relied little on American-style mortgage securitization. A
good explanation of the U.S. housing bubble should also take into account its
parallels in other nations. This leads us to explanations broader than just U.S.
housing policy, regulation, or supervision. It also tells us that while failures in
U.S. securitization markets may be an essential cause, we must look for other
things that went wrong as well.
• Large financial firms failed in Iceland, Spain, Germany, and the United King-
dom, among others. Not all of these firms bet solely on U.S. housing assets, and