The answer depends on your definition of “bubble”… and the market under the microscope. “House prices differ widely across OECD countries, both with respect to recent changes and to valuation levels,” the OECD advises in a report on residential real estate around the world.
Measured by the recent price-to-income ratio (a measure of affordability) relative to its long-run average, Belgium leads the way in “over-valuation,” according to the OECD. For the price-to-rent ratio (a measure of the profitability of owning a house), Norway’s at the top of the list. At the opposite extreme, Japan has the ignominious distinction of running dead last in this race in terms of the biggest “undervaluation” for price-to-rent ratio. Korea, meanwhile, inches out Japan with the biggest dip in price-to-income ratio relative to the long run. The US, by the way, looks relatively middling on this list: number 19 from the top (or ninth from the bottom, if you prefer).
Do the extremes represent bubbles–or anti-bubbles? Maybe. The trouble with bubbles is the dearth of hard and fast definitions. After they pop, however, all is clear. Then again, we’re not totally blind in real time. If you had to write up a short list of suspicious characters in the bubble (and anti-bubble) gang, we have some pretty good intelligence on where to begin snooping around.