Unsustainably high housing prices put Australia's economy "at the precipice" of a once-in-a-century bust if global borrowing costs rise more than 150 basis points, warns Industry Super Australia, the peak body for industry super funds.

Housing prices in Melbourne and Sydney rose to nearly seven times average weekly earnings last year from four times in 2000 even as real bond yields – a proxy for lending costs – more than halved, and a country of highly indebted households would suffer if interest rates rose, ISA's chief economist Stephen Anthony said.

"In the 2000s it has gone ballistic, to a point where it looks unsustainable," Mr Anthony told The Australian Financial Review.

Downhill from here? Australia's high debt levels and high housing valuations expose the economy to a once-in-a-century bust, Industry Super Australia warns. Pat Scala

"If we have a rapid rise in borrowing costs faced by banks through global markets – we look at long-term US interest rates [which] even this year have risen by 40bp since Christmas ... Once you start getting a 150 basis-point-plus rate increase, you think that a lot of these highly exposed households are in significant trouble."

The figures, which track the ratio of Australian dwelling prices to earnings since 1880 (when the ratio was just over three), add to concerns of a possible hard landing in Australia's hyper-charged property market, even at a time when few analysts expect the Reserve Bank of Australia to raise domestic rates fast any time soon. Since 1945, the average property price-earnings ratio is about 3.3, the figures show.