“Houses can only be worth what citizens can afford,” as Economist.com’s Buttonwood blog points out. “And that, once more, is becoming a stretch.”
In London, first-time buyers have to cough up an absurd eight times the average annual wage to buy a house.
For Britain as a whole, the house price-to-earnings ratio is rapidly heading towards five. It’s above the long-term average, far above the level reached in the late 1980s housing bubble, and not far off its 2007 peak.