Rat and Mouse
Fri
03
Jun
Wall Street Journal slams UK property market

The U.K.'s housing bubble put the U.S.'s in the shade. At their peak, U.K. house prices were at around 5.8 times average earnings, against a normal ratio outside of bubbles of around 3.4 times. They're currently around 4.4 times. By contrast, the U.S.'s ratio of house prices to median income peaked at around 4.8 times, against a trend rate, like the U.K.'s, of around 3.4 times.

Indeed, the U.K. property bubble was more akin to that seen in Japan in the late 1980s. This is a comparison to chill British homeowners' blood, because Japanese property prices have slid for the best part of 20 years.

According to WSJ's Alen Mattich, it's only a matter of time - with international money, which has supported the London market, slowing, taxes rising, and the prospects of rising interest rates - before the UK market is hit by a property bust that could take decades to reverse.

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