Australian house price values have surged to a new record high, growing at the second fastest rate in a study of 23 countries, according to global investment bank UBS.

Key points: Australian house prices at record level using US Federal Reserve measure

Australian house prices at record level using US Federal Reserve measure Second fastest increase behind New Zealand in past four years

Second fastest increase behind New Zealand in past four years Canada only nation in "bubble" territory, Australia and NZ not far behind

Using a methodology developed by the US Federal Reserve Bank of Dallas, UBS found the real house price to disposable income ratio per capita had risen to its highest point since the survey started in 1985.

The measure — which UBS described as the most rigorous and internationally consistent methodology — showed Australian house values had moved about 7 per cent above previous peaks in 2003, 2007 and 2010.

The ratio rose by 23 per cent in the past four years, with only New Zealand house values growing at a faster rate over that period.

Despite this, Australia's valuations were not the highest in the survey, lagging the most expensive Canada by 16 per cent.

UBS economist Scott Haslem said by using 'exuberance' indicators that test for explosive behaviour, "the Dallas Fed data shows that for house prices, the greatest exuberance is seen in Canada, Luxembourg, Australia & New Zealand".

"Though only Canada has greatly exceeded the 'critical value' for a bubble, Australia and New Zealand have risen to it," Mr Haslem said.

"This contrasts the early 2000s where all countries are shown to be well into 'bubble-risk' territory."

The data also showed a marked pick up in the momentum of the Australian housing market in the first half of the year.

"This is a clear cautionary tone for policy, both from the perspective of the risks of future financial instability as well as arguing for a re-examination of the tax policies relevant for residential property and the ability to negatively gear property losses against personal income," Mr Haslem said.