Do rises in real estate prices boost demand?

The highly expansionary monetary policies in place (we look at the situations of the United States and the euro zone) will probably lead to new bubbles in residential real estate prices. What effect does a real estate bubble have on demand and therefore on activity? On the one hand, the rise in real estate prices generates a positive wealth effect that boosts demand; On the other hand, it drives up the cost of housing (rented or purchased) and therefore reduces the income available to buy goods and services. So what is the net effect of a sharp rise in real estate prices on demand? A review of past developments seems to show that the boost to household demand via the wealth effect is the dominant effect .