Fears of house price crash are fading, says OECD

FEARS about a sharp correction in house prices are fading as real interest rates fall to zero and housing demand continues, the Organisation for Economic Cooperation and Development (OECD) said yesterday.

“Real interest rates are still close to zero and with bottlenecks in residential construction persisting, the housing market is set to remain in excess demand. As a result, worries about a sharp correction in house prices are fading,” the OECD said in its bi-annual economic review.

Real interest rates come close to zero when actual interest rates and the rate of inflation converge.