It needs to be appreciated that in the Indian context, the sharp rise in bank credit to the real estate was per se not a clear indicator of any asset price bubble given the inherent demand-supply dynamics in the economy and the genuine needs of an economy on a high growth path.
There was a confluence of positive factors contributing to the development including a decline in inflation and stable inflationary expectations, resulting in decline in both nominal and real interest rates and availability of ample systemic liquidity, contributed no less by the rising tide of capital flows.