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A recent study by the Organisation for Economic Cooperation and Development (the OECD) has concluded that property in the UK is the eight most over-valued in the world. The OECD compared property prices with local wages and rental income to come to the conclusion. The research was published in the Economist magazine, which produces a study of the housing market across the globe twice a year. The most over-valued property market was to be found in Hong Kong. There property was a massive 81% too high against the rental rates. Singaore was also seen as being very over-priced. The countries that come close to the top on the list were Belgium, Norway and Canada, with France, Australia and New Zealand just behind them. The best valued property inline with rents and wages was to be found in Portugal, Ireland, Germany and Japan. Both Portugal and Ireland saw massive slumps in the housing market during the financial crisis. In Ireland prices fell by more than 50% while in Spain a drop of around 26% was seen. However, the housing bubble explosion more or less by-passed Germany. Japan's housing market has been caught in an off-off price slide since the banking crisis in Tokyo back in 1990. According to the study, house prices in Great Britain are 31% too high compared to rents and are 21% over-priced when compared to local incomes. Just comparing property prices to rents, then houses in Britain were 19% too high, not as bad as France which was marked as being 39% over-valued and Spain that was 15% over-valued. Comparing the house price against achievable rents offer a similar ratio like price to earnings system used to value shares and the stock market. During the first part of the financial crisis, property prices across the UK dropped by around 20%, but have slowly recovered since 2010 so that values now in 2013 are around 11% below their peak seen in 2007. The OECD warns that if prices continue to rise in countries such as Norway, Sweden, Canada and New Zealand there could be a risk of correction in the market and a slump, specially if the cost of borrowing money went up or income levels fell. The UK property market has been mainly propped up by government intervention. The Bank of England has kept the base rate low and printing more money has meant there has been a steady flow of loans available at cheap rates so long as the buyer could save a fairly large deposit. The UK Government's 'Fundings for Lending Scheme' has meant mortgage institutions have had access to cheap money and have been able to offer ultra-cheap loans to house buyers, pushing down mortgage rates. The Help to Buy scheme offering help to first time and new buyers has also artificially propped up the market and by offering a tax exemption on stamp duty for a limited period, there was also an increase in buyers to the market. The Help to Buy scheme was initially only available to certain buyers and offered interest free deposits if buying a new build property in certain developments. The UK government plans to widen the scheme but this idea has been criticised by the Bank of England. Banks and Building Societies have been under pressure to give struggling borrowers more leeway and allow them more time to make repayments so preventing what could have been a huge number of repossessions. The UK market has also been supported by foreign buyers purchasing property, mainly high end, in London, as the capital is still seen as a safe investment. The property market in the United States has also started to show a slow but steady recovery in recent months. For more detailed articles on the UK property market visit What New Homes
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