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In more recent studies of the real estate market in US, Mikhed and Zemcik (2009) investigate whether the rapidly increasing prices of houses prior to 2006 could be justified by several economic factors such as building costs, stock market wealth, mortgage rate, personal income, rent and population. The paper employs co-integration analysis for both regional and aggregate data and based on their results they conclude that there was a house price bubble in the US in the period between 1995 and 2006. In addition, univariate time-series tests for individual Metropolitan Statistical Areas point out that the burst of the bubble which occurred after 2006 has not still put prices in line with their fundamentals and house price might drop even more. The period from the late nineties to the beginning of the Global Recession is very sensitive and there are many contradictions among econometric studies. Several more papers support the existence of a bubble. Shiller (2005) and Gallin (2006) both came to conclusion using aggregate data that the fast growth in US house prices is not explained by shifts in fundamentals after 2000. However, McCarthy and Peach (2004) managed to estimate a model which results came to opposite conclusions that there was no bubble in that period in the US and that the changes in house prices reflect movements in nominal mortgage rate and personal income. In addition, Smith and Smith (2006) results stated that house prices were even below fundamentals, which were derived from house rents where prices and rents were taken from a sample of matched single-family homes.

As mentioned above in the section, financial market models were applied on house prices in existing literature. As an example Clark (1994) paper investigates whether movement in house prices and rents in the US market are dependable on the forward-looking behaviour of the present value model. According to the model in areas where the price-to-rent is high, the future rent growth will be slow. His estimates back up the hypothesis and state that present value model tend to be important in house price valuation.

Caliman (2009) discussed the Italian housing market in the period from 1995 to 2003 and its exposure to busts. The paper used GMM method of estimation for house prices in different provinces [4] in Italy. The results came to the conclusion that in Italy house prices are largely justified by economic fundamentals. Moreover, according to the findings the constant increase in rents and the drop in mortgage rates explain most of the increase in house prices. In addition, the paper provides a forecast of future movements in prices and it suggests that any unexpected drops in prices are very unlikely. With similar intentions but different approach Merikas, Triantafyllou and Merika (2009) use co-integration approach for their study of house prices and economic factors in the Greek house market. They use quarterly data for the period from 1985 to 2008 and their finding suggest that the main fundamental factor explaining house price volatility are inflation, interest rates, unemployment and stock market. However they mention that a big part of the shifts in prices is caused by: 'behavioral factors inherent in the Greek society'.

Another Mediterranean country experienced a significant house price appreciation in the period starting from the late nineties up to 2003. In their paper Ayuso and Restoy (2006)