It is interesting to note that the OECD (2005, 2006) identified the deviation of the actual rent-to-price ratio from the fundamental ratio based on the long-term historical average ratio, employing the inverse of user cost as a proxy to the price-to-rent ratio, as the user cost equates the expected cost of owning a house with the cost of renting.
Further, the OECD estimated the nearing of a 10 peak to real house prices, if interest rates were to rise further. 20. Fourth, prudential policy is required in order to avoid the financial instability arising from a boom and bust in asset prices.