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Imf's Study Into Uk Economy

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IMF Study into UK (I know its a few months old, but hadn't seen it here before).

Go to page 16+ and there is a long section about housing:

how overvalued they think the housing market is in the UK

Worst case scenarios

How they think house price falls should be managed by Broon.

V. Interesting read. :o

IMF - PDF

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how overvalued they think the housing market is in the UK

IMF - PDF

Excellent graphs on :-

1. HPI to disposable income

2. HPI to rent

3. Long term trend if trend is as pre 1999

4. Long term trend if trend remains as post 1999

First class.

Note, however :-

36. Analysis suggests that the range of potential overvaluation in house prices is

wide. Some traditional techniques for estimating the sustainable level of house prices suggest

that overvaluation could be in the range of 25 to 60 percent. At the same time, cogent

arguments can be made that improvements in monetary and fiscal policy frameworks have

increased sustainable prices beyond what these linear estimation techniques can capture,

suggesting there is little, if any, overvaluation at all. From a policymaker’s perspective, there

does appear to be some risk that house prices are overvalued and, consequently, the

possibility of some correction cannot be ruled. Policymakers need to be cognizant of the risk

of such a correction and the possible implications.

Edited by justanewbie

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Excellent graphs on :-

1. HPI to disposable income

2. HPI to rent

3. Long term trend if trend is as pre 1999

4. Long term trend if trend remains as post 1999

First class.

Note, however :-

36. Analysis suggests that the range of potential overvaluation in house prices is

wide. Some traditional techniques for estimating the sustainable level of house prices suggest

that overvaluation could be in the range of 25 to 60 percent. At the same time, cogent

arguments can be made that improvements in monetary and fiscal policy frameworks have

increased sustainable prices beyond what these linear estimation techniques can capture,

suggesting there is little, if any, overvaluation at all. From a policymaker’s perspective, there

does appear to be some risk that house prices are overvalued and, consequently, the

possibility of some correction cannot be ruled. Policymakers need to be cognizant of the risk

of such a correction and the possible implications.

On the basis that the answer to most of life's seemingly dichotomous questions tends to be "somewhere in between", the most likely true overvaluation is 30-40%.

Or looking at it another way - when was the last time someone said that property is currently undervalued?

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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