The "Mortgage Equity Withdrawal" transmission belt is direct from housing wealth to consumption, but only relevant to the anglo world. Everybody in France seems to understand it is insane, except Sarkozy (who is pushing for it with other's money, and has now made it legally "available", but nobody would use it anyway). There is still a real but less efficient "psychological" transmission belt (like: your saving rate gets down to zero if you feel your house is already saving for you).

I think the difference in house prices between France and Germany boils down to one very simple fundamental: demographics. France is in a mini baby-boom, whereas Germany is plainly dying in the nursing home. The same kind of fundamental will drive the long-term recovery of other markets, like Ireland (OK long term), or Spain (no kids, will crash forever once the retired britons are forced to pull back with there pound-denominated pension slashed 30% by the coming pound crash)

Pierre