Sunday, April 12, 2009
David Smith thinks we may overshoot
Everybody agreed that house prices were overvalued before they began to fall more than 18 months ago [O RLY?]. The question was how they would work off that overvaluation: gradually or suddenly. The Nationwide building society suggests that, by the end of last year, the inflation-adjusted average house price was just £5,000 above the long-term trend . The further fall in prices during the early part of this year means that house prices are now back on trend. [the trendline having been dragged upwards over recent years by rampant HPI] Meanwhile Halifax says the house-price-to-earnings ratio has fallen to 4.34 - within 9% of the long-term average.