Property Cycles, Speculative Bubbles and the Gross Income Multiplier

Abstract

We address in this study the question of whether significant price increases occurring during the up-phase of the property cycle can be explained by a speculative bubble. The findings indicate that the Swedish market for income real estate may have been partly driven by a speculative bubble during the 1980’s. The conclusion is based on an analysis of panel data where the state of the property cycle is mirrored by the value of the Gross Income Multiplier.