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A stealthy improvement in valuations

Accelerating wage growth has lowered the house price to earnings ratio, even as house prices themselves have continued to climb. Indeed, London has already seen an 11% drop in earnings-adjusted prices. Looking ahead, we expect wage growth to drive a further fall in the house price-to-earnings ratio. That will bring prices to a more sustainable footing by 2021, without the need for a house price collapse.

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