The UK’s house price to income ratio has been inflated to within a whisker of its pre-recession peak and is well above its long-term average. Property prices would need to fall by up to 40%, or household income grow at ten times its current pace for the next five years, in order to bring the ratio back to balance. We maintain our view that this increase is demand driven, brought about by both exceptionally low real rates of interest and...

The UK’s housing bubble: ready to pop?