The last 12 years have seen a myriad of crises in various areas – international relations, climate, economies and, most recently, a global pandemic. Though the economic repercussions of COVID19 haven’t been because of inadequate economic policy, it is likely that the current crisis may accelerate negative trends or burst inflated bubbles within some industries. This is why it’s especially relevant to look at overvalued assets in our current environment.
This month’s chart looks at the housing market in a group of countries around the world. Using data from the OECD Economic Outlook, I estimate how much housing is overvalued in terms of price-to-rent and price-to-income ratios, all rebased in 2008.