First, we emphasize that the real estate price peaks which are currently under way in many industrialized countries (one important exception is Japan) share many of the characteristics of previous historical price peaks. In particular, we show that: (i) In the present episode real price increases are, at least for now, of the same order of magnitude as in previous episodes, typically of the order of 80 percent to 100 percent. (ii) Historically, price peaks turned out to be symmetrical with respect to the peak; soft landing, i.e. an upgoing phase followed by a plateau, has rarely (if ever) been observed. (iii) The inflated demand is mainly boosted by investors and high-income buyers. (iv) In the present as well as in previous episodes, the main engines in the upgoing phase have been the hot markets which developed in major cities such as London, Los Angeles, New York, Paris, San Francisco or Sydney. In our conclusion, we propose a prediction for real estate prices in the West of the United States over the period 2005-2011. We also point out that investment funds, which already play a key role in stock markets, have in recent times began to heavily invest in real estate. In the future, one can expect them to become major players in property markets worldwide. The outcome of the present episode will tell us how quickly this transformation evolves. Thus, if the height of the present peak substantially surpasses the magnitude of previous ones, one may infer that investment funds have been able to establish strong communication channels between real estate assets on the one hand and financial assets (e.g. bonds, stocks, options) on the other hand.

13 pages, 10 figures To appear in the Evolutionary and Institutional Economics Review