In recent years house prices have more than doubled in the largest Italian cities (Panetta et al. 2009), and similar developments have been recorded in other European countries, with the exception of Germany. Developments in residential property prices are an important factor in monetary policy decisions aimed at maintaining price stability in the euro area over the medium term. The recent global crisis had its main origin in the financial and real estate sector, so that developments in housing markets should be kept under control because of their potential disruptive impact on financial stability and the real economy (Campbell et al. 2009; Panetta et al. 2009; Muzzicato et al. 2008; Leamer 2007).