Survey says Aussie homes overvalued
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.