houses to fall 25%, page-15

This idea that House prices are over valued on a price to rent scale is utter garbage. If you view home owenership as an inflation adjusted perpetuity (which it is), with inlfation around 3% & yields around 4% (both less than what they are currently) the value of a home will roughly equal the lifetimes worth of rents to live in that home. This should be intuitive.

In other words, existing home owners when selling property are asking to compensated for the lifetimes liability of renting they would otherwise be paying. This is akin to an owner of listed companies with high ROE requiring a higher PE when selling their shares. The market is simply ensuring no one gets a free lunch.