Thursday, May 30, 2013

House Prices Overvalued?

According to the OECD, house prices in the UK are too high.

The Telegraph reports that a study by the OECD, which compared prices with local wages and rents, suggests that British house prices are 31% too high compared to rents and 21% over-priced against incomes.

Given that housing is the bedrock of the British economy, providing a credit hungry public with the raison d'etre to borrow ever increasingly large sums of money, people would be forgiven for thinking that this analysis is grim news for the economy.

Fear not!

The British government cannot help itself when it comes to meddling in the housing market and, via its Help To Buy Scheme announced in the March Budget, has already taken actions to underpin and further stimulate the housing market.

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