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International Finance Discussion Papers
The International Finance Discussion Papers logo links to the International Finance Discussion Papers home page Housing Market Risks in the United Kingdom
Robert F. Martin
2008-954  (November 2008)

Abstract:  House prices in the United Kingdom rose rapidly in recent years. The run-up, larger than any other in U.K. history, leveled off early last year. House prices are currently declining at rates faster than those seen in the early 1990's downturn. The housing downturn, however, is far from complete. Using the price-rent ratio as a guide, house prices are likely to fall at least a further 30 percent before leveling off. Given the historic links between housing and real activity, the downturn is likely to be associated with very slow growth. Going forward, we recommend the price-rent ratio as the appropriate measure of housing valuation.

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Rent price ratio, house price, measurement

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Last update: November 19, 2008