Svensson says house price metrics ‘unreliable and misleading’
Former Riksbank deputy governor says authorities are misjudging risks
House prices may not be as overvalued as they seem and could even be undervalued, due to the use of “unreliable and misleading” indicators, Lars Svensson argues in new research.
In the working paper, Svensson, a professor of economics at the Stockholm School of Economics, criticises the widespread use of price-to-income (PTI) and price-to-rent ratios, which he says are “unreliable and misleading”.
“These indicators disregard the crucial role of interest rates and other costs of owner-occupied
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