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"In relation to incomes, rents or their own past, U.S. home prices still look low".
"In relation to incomes, rents or their own past, U.S. home prices still look low," he said.
And if British house prices are dangerously overpriced in relation to incomes, the same can be said of New Zealand, Australia, Canada, France and Belgium.
Taking the average ratio of house prices to incomes in 1975-2000 as a baseline, American house prices are now almost 30% overvalued.If real interest rates are permanently lower, this could justify higher prices in relation to incomes.
House prices are also at record levels in relation to incomes in these nine countries.America's ratio of prices to rents is 35% above its average level during 1975-2000 (see chart 1).
French house prices have increased by 15% over the past year, causing the Bank of France to express concern about the risk of a speculative bubble.Calculations by The Economist suggest that house prices have hit record levels in relation to incomes in America, Australia, Britain, France, Ireland, the Netherlands, New Zealand and Spain.
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The survey collects information relating to a broad range of issues in relation to income and living conditions.
He said: "I am very concerned by the buildup of household debt in relation to income.
Taxes are also rising in relation to income, the study found.
Interest payments may be low in relation to income, but that mainly reflects lower inflation.
"Food Prices in Relation to Income Levels in New York City" (with R. E. Alcaly), The Journal of Business, October 1971.
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