The bubble in asset price is defined as the deviation of the asset value from its fundamentals, empirically Mendoza and Terrones (2008) measure the bubble as the deviation of an asset price from the standard deviation of its cyclical component. The Hodrick-Prescott is used to derive the cyclical component. Based on this procedure, I want to divide the house price to fundamental and bubble components in which the portion of the prices that is above the standard deviation of the cyclical component is flagged as a bubble. does this seem reasonable?
In addition, I would like to do the same with other methods so I can use it as a benchmark, but I don't know if there is one. Could anyone please suggest other methods used for this purpose?