But it is also possible that rapid economic growth led households to revise up their expectations of future income and raise their demand for housing. Indeed, the macroeconomic environment before the start of a property bubble is typically highly favourable.
This was certainly the case in Ireland, where real GDP grew at an average rate of 6% per year in the period 2000 to 2006. Specifically, asset prices were rising, labour market participation rates and nominal wage growth were high and unemployment was low.