ABSTRACT
Cycles are common in housing markets across the world. This chapter explores different ways of measuring market sentiment and their application in the housing market. In the UK housing market, the nominal house price index is its peak right before the global financial crisis. The US housing market is different from the UK one in several ways. First, the nominal and real house price indices are much more in agreement than is the case in the UK. Second, price-to-income ratio had been predominately over 100, the cut-off point between over-valued and under-valued market, before the global financial crisis. Market sentiment is helpful in prediction of house price turning points. Therefore, to find a good measurement of sentiment, one should start with well-tested attention measurements first, and then choose the one that can reliably and effectively identify buyer and seller attention.
