The latest quarterly index of global house prices published in The Economist shows Australian homes are the most overvalued in the world, ahead of Hong Kong and France.
While the magazine said the local economy was strong, its index may renew fears of a house price bubble in Australia.
The ratio of house prices to rents in Australia is 56 per cent above its long-run average between 1975 and 2010, it found.
The ratio in Hong Kong, the second most overvalued market, is 54 per cent followed by France at 48 per cent.
In the US, which experienced a hefty decline in property prices during the global financial crisis, house prices to rents were only overvalued by three per cent.
