We have been asked by several clients about the difference between our measure of the house price to earnings ratio and that reported by the Halifax. The Halifax measure suggests that house prices need to fall by a further 8% to bring the house price to earnings ratio back into line with its long run average, while our measure suggests that house prices need to fall a further 25%. Neither measure is perfect, but we are happy that ours is not presenting an overly gloomy picture.
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