MacroPolis

When it comes to Greek house prices, there’s good news and there’s bad news. On the one hand, some read the recent rebound in property values almost to pre-crisis levels as a sign that the Greek economy is returning to normality after the decade-long financial crisis. On the other hand, policy makers are beginning to warn that a potential housing boom could pose a risk to economic recovery.

To explain some of the ambivalence around the subject it is important to look first at what factors are behind the recent rally, and why, in those famous last words, it might be different this time. For the same reason, it is crucial to understand the k...