Friday, May 28, 2010

The devil’s in the detail – house prices to rent and income

Which way next for global house prices?

The latest OECD economic outlook report has revealed some fascinating stuff about the value of house prices relative to income and rent across the world. This is a good indicator, because it gives us a pointer as to whether house prices are overvalued, and thus due another fall down the line. The article looks at the UK, US, Germany Japan, Spain and France. Japan's tale of woe is illustrated beautifully by the data, will the rest follow?

Posted by mike @ 12:59 PM (1905 views)
Please complete the required fields.



5 thoughts on “The devil’s in the detail – house prices to rent and income

  • mark wadsworth says:

    Good graphs and everything on 1) house-price-to-rents ratio and 2) house-prices-to-earnings ratio, but misses the more fundamental point that 3) the ratio of rents-to-earnings is more or less constant. Rents/earnings are the Maypole around which house prices dance.

    Reply
    Please complete the required fields.



  • An interesting view of the situation. If only I spoke German.

    It points to potential large house price falls.

    Reply
    Please complete the required fields.



  • tenyearstogetmymoneyback says:

    Anyone know what basis they are using for their ratios i.e. Months Rent ?

    135 months seems incredibly low (I have calculated about 450 for this place).
    If you could pay for a place in 11years three months you would have to be bonkers to rent.

    Obviously it can’t be 135 years.

    Reply
    Please complete the required fields.



  • tenyearstogetmymoneyback says:

    I think I have found the answer here http://www.oecd.org/dataoecd/41/56/35756053.pdf.

    The figures are simply based on a sample average of 100.

    An interesting report, which despite being published in 1995 says things like

    “Real house prices increased unusually rapidly in recent years”

    “Model-based evidence points to overvaluation in the United Kingdom,
    Ireland and Spain but not elsewhere”

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>