While not at dangerous levels, the house price-to-earnings ratio does suggest home valuations are stretched. With mortgage interest rates unlikely to fall much further, and limited prospect for a relaxation in credit conditions, that will limit house price gains to earnings growth. Based on our current forecasts, that implies house price growth will not get much higher than 3% y/y over the next couple of years.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services