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House price-to-rents ratio - why the different messages?

We have been asked why the house price-to-rents ratio compiled using a National Accounts measure of rents indicates that housing is close to fair value, while the Retail Prices Index measure suggests that housing is overvalued. Although neither measure is perfect, there are grounds to think that the National Accounts overstate the growth in rents. Thus the RPI data give the least distorted picture.

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