Australian house prices remain the most overvalued in the world, according to the latest quarterly ranking of global house prices by The Economist magazine.

Based on a historical gauge of home prices to rents between 1975-2010, the magazine estimates that Australian residences are 56 per cent over-valued, exceeding the 54 per cent over-priced rate in Hong Kong and 48 per cent in France.

Australian house prices are 56 per cent overvalued, The Economist estimates - a higher rate than in Paris or Hong Kong. Credit:Glenn Hunt

"There may be good reasons for Australian prices to have risen so far, but people made similar, and ultimately incorrect, arguments for the run-up in prices in the West," The Economist said in a statement accompanying the survey's release.

The report may stoke debate on whether Australia's property market is a bubble waiting to pop.