Australian house prices 36 per cent overvalued
Australians are grossly overvaluing property prices by up to 36 per cent, one report has revealed.
The Economist magazine recently released its August 2012 international residential property update, showing Australia's real estate sector ranks as number 13 out of 21 markets.
The report, which previously stated Australian houses were 38 per cent above their fair value, revealed price decreases in the market of 2.1 per cent year-on-year.
The term fair value is defined by the publications as "the long-run average ration of house prices to disposable income and to rents."
While Australia ranked high, a number of other countries superseded the nation, with Hong Kong overvaluing property by 64 per cent, Singapore by 58 per cent and Canada averaging house prices 54 per cent over their fair value.
And the rise in prices has been a gradual increase, the report said, with Australian houses rising in sale value by less than ten per cent over the last five years.
By comparison, in the same period, Hong Kong saw price gains of 64 per cent, Austria with 23 per cent and Canada at 18 per cent.
The poorest performing markets are Ireland, with price declines of 14.4 per cent in the last 12 months, and Spain, with price falls of 8.3 per cent in the same period.
"Property prices in Ireland, at the foot of our table since April 2010, continue to plummet. They have now halved in value, after a five fold rise between 1995 and their 2007 peak," The Economist stated.