By Leith van Onselen

The Economist has released its latest round-up of global housing, which found that dwelling prices rose in 20 of the 26 countries it tracks over the past year, at an (unweighted) average rate of 5.1% after adjusting for inflation.

And according to The Economist, Australian housing is now more than 40% overvalued:

To determine whether homes are fairly valued The Economist looks at the relationship between prices and disposable income (an indicator of affordability) and between prices and rents (a substitute for buying a home). If rising prices move these ratios above their long-run averages, then either incomes or rents are likely to rise, or house prices to fall… Thanks largely to their big cities, housing appears to be more than 40% overvalued in Australia, Britain and Canada, according to the average of our two measures.

Here are the key valuation charts:

Nothing to see here. Move along…

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