English Economic Analysis Institute: "Major Advanced Countries' Housing Prices Overvalued by 10%"

[Image source=AFP Yonhap News]

[Asia Economy Reporter Byunghee Park] The British economic analysis firm Oxford Economics has diagnosed that housing prices in wealthy countries are overvalued by about 10%.

According to Bloomberg on the 20th (local time), Oxford Economics analyzed that the housing market boom has continued for 10 years. Oxford Economics explained that the current boom can be compared to the housing market boom just before the 2007 financial crisis, and that such a boom is rarely seen since 1900.

Oxford Economics estimated that housing prices in 14 major advanced countries have risen by 43% over 10 years. They explained that the 10-year period is the second longest since 1900, and the rate of increase is the third highest since 1900.

In particular, they analyzed that the housing markets in the Netherlands, Canada, Sweden, Germany, and France are in the most dangerous situation. They pointed out that housing prices in these countries have risen too much, and the risk of a housing market collapse increases as prices rise further.

Despite the controversy over overvaluation, there are also forecasts that housing prices will rise further. In a report released earlier this month, the British real estate agency Savills predicted that the average housing price in the UK will rise by 21% over the next four years. The housing price increase rate in the UK in April (compared to the previous month) recorded 2.1%, the highest since 2004.

Savills expected that housing price increases would continue thanks to economic recovery and various government stimulus measures. The UK government has started to curb housing prices by reducing the acquisition tax exemption benefits for home purchases from this month.

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