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The house price earnings ratio is a good measure of housing valuations – and it is signalling danger.

We have long argued that houses are over-valued, based on evidence from the house-price earnings ratio (HPE). But some commentators argue that the HPE is no longer a credible leading indicator of housing valuations. This Focus looks at whether evidence from the HPE ratio is in fact dubious, and what implications this would have for our view of the housing market.

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