Sur­vey says Aussie homes over­val­ued

Townsville Bulletin - - Investor -

A U S T R A L I A N S l o v e t o watch their home val­ues rise but a lead­ing mag­a­zine says they are way over­val­ued.

The lat­est quar­terly in­dex of global house prices publ i shed i n The Econ­o­mist shows Aus­tralian homes are the most over­val­ued in the world, ahead of Hong Kong and France. While the mag­a­zine said the lo­cal econ­omy was strong, its in­dex may re­new fears of a house price bub­ble in Aus­tralia.

‘ ‘ T h e r e m a y b e g o o d rea­sons for Aus­tralian prices to have risen so far but peo- p l e m a d e s i m i l a r , a n d ul­ti­mately in­cor­rect, ar­gu­ments for the run-up in prices in the west,’’ it said.

The ra­tio of house prices to rents in Aus­tralia is 56 per cent above its long-run av­er­age be­tween 1975 and 2010, it found. The ra­tio in Hong Kong, the sec­ond most over­val­ued, is 54 per cent fol­lowed by France, 48 per cent.

In the US, which ex­pe­ri­enced a hefty de­cline in prop­erty prices dur­ing the global fi­nan­cial cri­sis, house prices to rents were only over­val­ued by 3 per cent.

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