The Organization for Economic Co-operation and Development ranks Canadian real estate the third most overvalued of the 34 developed countries assessed by the group, based on two metrics tracking what homes cost compared to incomes and rents.

The Paris-based OECD, which monitors and compares wealthy nations, recently released a report that ranks its 34 member countries based on two broad housing measures:

The price of the average home compared to what it could be rented for.

What the home costs compared to the average salary.

According to that analysis, Canada has the third most overvalued real estate in the developed world, just behind Belgium and Norway, which are deemed to have the frothiest real estate market under the OECD's terms.

Based on rents, Canadian real estate is overvalued by as much as 60 per cent, the OECD says. In terms of prices to incomes, Canada fares a little bit better, but the OECD suggests the country's real estate is still as much as 30 per cent overvalued.

On the opposite end of the spectrum, the OECD says real estate in Japan, Germany, South Korea, Ireland and Portugal is undervalued. In almost all those cases, home prices should be higher than they are, considering rents and income levels.

Based on the numbers, the OECD places Canada in the fifth of five baskets — one where real estate seems overvalued but prices continue to increase.

"This is the case in Canada, Norway, New Zealand and, to a lesser extent, Sweden," the OECD says. "Economies in this category are most vulnerable to the risk of a price correction – especially if borrowing costs were to rise or income growth were to slow."

The latest data from the Canadian Real Estate Association indicates the average Canadian home was worth $380,588 in April — 1.3 per cent higher than it was in the same month a year earlier.