If you think that financial assets are expensive at the moment, you are not alone. Deutsche Bank has looked at the prices of equities, bonds and residential property in 15 countries as far back as 1800. The average valuation of the three asset classes is above the level of 2007 and close to an all-time high (see chart). Of the three assets, bonds are the priciest. A combination of very low inflation and big purchases of government bonds by central banks means that nominal yields are close to record lows; real yields (ie, accounting for inflation, using a five-year average) have been lower only 17% of the time. For equities, because of the lack of long-term profit numbers, Deutsche compared share prices with nominal gdp. On this basis, equity-market values have been higher only 23% of the time (though shares looked dearer before August's sell-off). For houses, Deutsche was only able to find data from 1970. It calculates that real house prices peaked in 2007 and are now at average levels.
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