Is London Blowing a New Housing Bubble?

You might excuse a bloke for not knowing we're in the midst of a housing crisis. In London, the real estate party still rages on. Prices are going up in fashionable parts of the city -- way up, reports the Wall Street Journal. A one-bedroom co-op flat near Hyde Park? Asking price, $1.5 million. Or, how about a two bedroom duplex for $3.3 million?

"The London real estate bubble," warns the Journal, "arguably the biggest one of all, still hasn't popped."

And that's a problem because, if it does pop, it could potentially take with it the chances for a full-throttled global economic recovery, especially in light of the growing concerns about the health of the European Union.

The head of Boston money firm Jeremy Grantham tells the Journal that the current British property bubble may be the biggest the world has seen since Japan's back in 1990. London real estate prices are down only about 9 percent from their 2007 peaks, meaning there is plenty of room for further and maybe even dramatic deflation.

The Journal raises a serious question: Is the worldwide real estate crash, then, really over? Or is the worst actually still to come?