According to The Economist, Australian housing is now 56.1% overvalued based on the long run average of price to rent ratios. The price to rent ratio is seen as similar to that of the PE (price/earnings) ratio used to value shares.
Australia is in 1st position on the leader board of overpriced property. In close 2nd is Spain at 53.4%, Hong Kong at 49.1%, France 39.7%, and Sweden 37%.
Japan had a huge house asset bubble in 1990 and has yet to recover, with the economist calculating prices 33.7% undervalued.
» You can’t keep ’em down – The Economist, 15th April 2010.