Weekend Quiz

The answer to last weekend's quiz was as follows:

Sydney 8.50
London metro 8.30
Perth 8.00
Vancouver 7.70
NY metro 7.20
Auckland 6.90
Dublin 5.70
Liverpool 5.30
Chicago 4.50
Dallas/Ft. Worth 2.70

Congratulations to winner barreb, who got them all right. As barreb likely knows, all data comes from the latest Demographia survey on household affordability, available at http://www.demographia.com/. Demographia defines a housing market as 'affordable' if the price/income ratio is 3.0 or below.

The survey is really worth reading. It suggests that in aggregate, US house prices are not particularly high, relative to incomes, in comparison with the rest of the world. That having been said, the survey does reveal the US as a land of extremes. Some US markets are the most expensive in the survey (which comprises the Anglo-Saxon countries) , while others are the cheapest. The survey appears to confirm Macro Man's prior view that there is no single homogeneous US housing market.

That being said, the survey also provides an object lesson the pitfalls of statistics. The survey rates countries on the basis of the median market house/price income ratio. The US rates as the second most affordable market in the survey:

However, that 3.7 reading for the US can be misleading. The average ratio for the US was actually 4.2. And if markets were weighted by population, the average was 5.2! While this reading would keep the US in "second place", it nevertheless catapults the country as a whole from 'moderately unaffordable' to 'seriously unaffordable.' The two takeaways from this are that you can prove anything with statistics, and that if you live in the United States, it's best to live in a small town!

Anyhow, on to this weekend's quiz. If you have a Bloomberg, don't cheat. Answers in the comments section for anyone who wants to play.

Rank the following ten markets from highest to lowest P/E ratio, as of yesterday's close:

* Bovespa (Brazil)
* DAX (Germany)
* Hang Seng (Hong Kong)
* ISE 100 (Turkey)
* Nikkei (Japan)
* S&P 500 (USA)
* Sensex (India)
* Shanghai A shares (China)
* TSE (Canada)

Good luck!
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Click here for comments
March 31, 2007 at 6:11 PM ×

Price/income is a broad brush, since rates vary. Today's 6-to-1 market is a lot more affordable today with 6% mortgages than it was ten years ago at 8% or twenty years back at 10%.

Moreover, a 6-to-1 market is much more affordable in the US, with subsidized, fixed-rate 6% mortgages containing embedded puts, than it is in Australia, with mostly unsubsidized, adjustable-rate 8% mortgages carrying early-redemption penalties.

A 10-to-1 market resident,


April 1, 2007 at 2:13 AM ×

40.82 Shanghai A shares (China)
21.54 Nikkei (Japan)
20.84 Sensex (India)
16.61 S&P 500 (USA)
15.71 TSE (Canada)
15.38 Hang Seng (Hong Kong)
14.45 ISE 100 (Turkey)
12.87 DAX (Germany)
12.67 Bovespa (Brazil)
11.83 FTSE (UK)

Am not sure of Bovespa though...

April 1, 2007 at 9:21 PM ×

Separate subj; Fed short term activity. Took the same data as you probably did, got different picture by graphing total acceptances 2000 to present. Shows hit a peak about Aug 2002 and has stayed there for 5 years, plus or minus. I stand very much corrected that recent lending was exceptionally high. But it's been exceptionally high for last five years. Using dollar rather than acceptance ratios makes a difference, even tho I didn't expect result. Will send data if desired w/graph.