According to OECD research, house prices in Britain are still significantly overvalued. Indeed – that’s both on a price-to-rent basis and on a price-to-income basis. It’s extremely hard to reconcile that with the Chancellor’s diagnosis that Britain has suffered a “housing bust”. Given that is the rationale behind Help to Buy, one has to wonder, again, at the wisdom of the policy.
H/t Albert Edwards of SocGen for the chart.