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World growth has been broadening over the past few months. Already strong in North America and most of Asia, economic momentum now looks well established in Japan, and continental Europe is progressively recovering from its latest bout of weakness. The fledging European expansion has been facilitated by low long-term interest rates, euro depreciation and buoyant export markets, although final domestic demand is still growing below trend....
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Despite the run-up in energy prices, growth in the OECD area has remained robust, with the expansion broadening again to regions that have experienced weak spells in the past. The US economy has stayed buoyant, the expansion in Japan has spread to domestically-oriented activity and there are signs that a rebound is underway in the euro area, where weak domestic demand has so far been acting as a drag. Labour market outcomes have been positive overall, and underlying inflation has remained subdued....
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In the vast majority of OECD economies, house prices in real terms (the ratio of actual house prices to the consumer price index) have been moving up strongly since the mid-1990s (Figure III.1).1 Because of the important role housing wealth has been playing during the current upswing,2 this paper will look more closely at what is underlying these developments, with a view to shedding some light on whether or not prices are in line with fundamentals....
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