A graph showing house price-to-income ratios around the world ( IMF )

Struggling to buy a house? It could be because our property prices are among the highest in the world when compared to incomes, and we're relying on luck for the situation to change, writes Michael Janda.

A new IMF report confirms that Australia belongs to an elite economic club - one where house prices are way above historical norms.

The International Monetary Fund's data places Australia third among developed nations on the ratio of house prices to incomes, and fifth on the measure of house prices to rents, when both figures are compared to historical averages.

Indeed, Australia is specifically mentioned by the IMF's deputy managing director Min Zhu - along with Belgium, Canada, Norway and Sweden - as one of the countries where house prices are out of whack with where history suggests they should be.

We might be among the worst, but we're not alone: out of 27 OECD countries examined, 19 currently have above-average house price to rent ratios; and 14 out of 24 developed economies still have above-average house price to income ratios, even after the dent in home values in many countries caused by the global financial crisis.

The IMF, like Australia's Reserve Bank, is quick to observe that historically high housing prices do not automatically portend a crash.

"In some cases, this more detailed look suggests much more modest overvaluation than indicated by the house price to income and house price to rent ratios," Dr Zhu noted.

"One example of this is Belgium, where the IMF concluded that despite the high valuation ratios, risks of a sharp correction of real estate prices appear contained."

However, the IMF is equally quick to add that this doesn't mean policymakers can be complacent.

"What is clear however, is that monetary policy will need to be more concerned than it was before with financial stability and hence with housing markets," Dr Zhu warned.

Leaning against the wind

Here the fund is weighing into a debate that has raged for years between central bankers - whether to target asset prices or not.

The old view is best encapsulated by the so-called Greenspan doctrine, named after the man who ran the US Federal Reserve at the time of the 1987 stock market crash, the 2000 tech wreck and who, in his tenure that ran until 2006, oversaw most of the run-up in US house prices that preceded the global financial crisis.

"We recognised that, despite our suspicions, it was very difficult to definitively identify a bubble until after the fact - that is, when its bursting confirmed its existence," Alan Greenspan said after the dot-com bubble had burst in 2002.

In the same speech he also argued that a central bank's best bubble cure - raising interest rates - might be as bad, or worse, for the economy than the effects of the bubble bursting, and that the costs of mopping up a collapsed bubble would be relatively low.

It is fair to say that Dr Greenspan's wisdom, widely accepted pre-financial crisis, has now largely fallen by the wayside with central bankers (a compelling analysis was presented by RBA visiting scholar Frederic Mishkin in 2011).

The reason is the severe damage that asset bubbles can cause when they trigger broader banking crises.

The IMF says boom-bust house price patterns have preceded more than two-thirds of the 50 most recent systemic banking crises.

And when you have a banking crisis in a modern, debt-fuelled capitalist economy it is almost impossible to escape a recession.

Indeed, one of the reasons Australia escaped a recession in 2008-09 was that its banks remained solvent, through a combination of good luck, good management and a healthy dose of taxpayer backing.

Aside from the direct threat of a financial crisis-induced recession, perhaps an even bigger long-term danger of over-priced property markets is the money they suck out of the productive economy.

High residential real estate prices put upward pressure on commercial and industrial real estate, raising the costs of doing business and making a country's economy less competitive.

Rising real estate prices also prompt banks to favour property lending - a recent report from UBS estimates that Australia's banks have pumped 95 per cent of all lending into real estate, mostly residential.

That, in turn, dries up credit for innovation and enterprise, as economist Steve Keen argued earlier this week.

IMF's 'Global Housing Watch'

That is why the IMF is launching a website dedicated to comparing international real estate markets, as an asset class not only prone to some of the more spectacular and destructive bubbles, but also as one fundamental to both the economic and social wellbeing of a nation.

The IMF's explicit aim is to "to nudge policymakers to take early action to moderate housing booms."

No doubt the fund would be pleased to see the Reserve Bank of New Zealand's efforts to lean against what it has identified as a developing housing bubble in some of its key cities.

Meanwhile, Australia's surging property market has been well and truly on the fund's radar, with warnings like this one last year.

Perhaps the IMF would like to see Australia's authorities consider limiting risky home lending in a way similar to their New Zealand counterparts. That is certainly hinted by this statement from the fund's deputy director, even though it is not directed at any one nation.

"The interactions of various policy tools can be complex. But all this should not be an excuse for inaction," Dr Zhu cautioned.

"The interlocking use of multiple tools might overcome the shortcomings of any single policy tool. We need to move from 'benign neglect' to an 'all of the above' approach when it comes to policy choices."

Housing blind spot looming

But while the IMF is taking a closer look at global housing markets, there is a risk that Australia's official data gatherer may turn a blind eye.

The Australian Bureau of Statistics last week warned that it may abandon its longstanding House Price Index as part of $50 million in budget cuts over the next three years.

While there are a couple of well respected private indices out there, several prominent property analysts have warned that losing the ABS data would remove the benchmark against which the accuracy of these figures is judged.

It would also see the end of Australia's longest running reliable house price indicator - one that allows the kind of historical comparisons that the IMF is undertaking in its reports.

The ABS index also underwent some recent improvements to include units and other non-house dwellings in its figures, overcoming some shortcomings it previously had when compared to some of the private indicators.

Let's hope Australian policymakers take the IMF's advice, and maintain an eagle eye on property markets.

The RBA has been making the right noises, even though it has resisted taking action so far, but it is harder to judge what the prudential regulator is doing as most of its action is taken behind closed doors with the banks.

As for governments, most property market analysts have long given up any real hope of them doing anything likely to put a serious lid on house price growth - there's more votes to lose than gain, at least in the short-term that is a typical politician's fixation.

With a bit of luck, Australia might stumble into an extended period of house price stagnation, or modest falls, as it did in 2011 and 12, gradually bringing prices back into line with rents and incomes.

But Australia has used up a fair bit of luck to avoid a recession over the past 23 years, and there may not be much more left in the cupboard.

Michael Janda is an ABC online business reporter. View his full profile here.