The Most Overpriced Housing Markets In The Developed World

bern, switzerland

Photo: Wikimedia Commons

Most OECD countries have experienced an inflating home price bubble from the first quarter of 2001 through the fourth quarter of 2006.  But many have yet to see their bubbles burst.Torsten Slok, chief international economist at Deutsche Bank Securities, has a new report examining global home prices.

Specifically, he looks at the relative valuation of housing markets as measured by price/rent and price/income and compares those ratios to historical long-run averages.

Slok argues that home prices in many countries in the developed world are still overvalued. Across the Euro area, home prices are still overvalued by 14 per cent.

We ranked the countries by the average over- / under-valuation of home prices relative to rent and  income.

Japan's home prices are undervalued by 37%

Home price to rent:
-37 per cent

Home price to income:
-38 per cent

Source: OECD / Deutsche Bank

Germany's home prices are undervalued by 26%

Home price to rent:
-22 per cent

Home price to income:
-31 per cent

Source: OECD / Deutsche Bank

Korea's home prices are undervalued by 14%

Home price to rent:
11 per cent

Home price to income:
-38 per cent

Source: OECD / Deutsche Bank

USA home prices are undervalued by 9%

Home price to rent:
-1 per cent

Home price to income:
-17 per cent

Source: OECD / Deutsche Bank

Switzerland's home prices are undervalued by 8%

Home price to rent:
-6 per cent

Home price to income:
-11 per cent

Source: OECD / Deutsche Bank

Ireland's home prices are undervalued by 2%

Home price to rent:
3 per cent

Home price to income:
-6 per cent

Source: OECD / Deutsche Bank

Greece's home prices are fairly valued

Home price to rent:
-6 per cent

Home price to income:
5 per cent

Source: OECD / Deutsche Bank

Italy's home prices are overvalued by 10%

Home price to rent:
9 per cent

Home price to income:
12 per cent

Source: OECD / Deutsche Bank

Denmark's home prices are overvalued by 17%

Home price to rent:
19 per cent

Home price to income:
15 per cent

Source: OECD / Deutsche Bank

Finland's home prices are overvalued by 22%

Home price to rent:
44 per cent

Home price to income:
0 per cent

Source: OECD / Deutsche Bank

Sweden's home prices are overvalued by 25%

Home price to rent:
35 per cent

Home price to income:
15 per cent

Source: OECD / Deutsche Bank

Spanish home prices are overvalued by 33%

Home price to rent:
39 per cent

Home price to income:
27 per cent

Source: OECD / Deutsche Bank

UK home prices are overvalued by 34%

Home price to rent:
39 per cent

Home price to income:
30 per cent

Source: OECD / Deutsche Bank

Netherlands' home prices are overvalued by 36%

Home price to rent:
28 per cent

Home price to income:
43 per cent

Source: OECD / Deutsche Bank

Australia's home prices are overvalued by 39%

Home price to rent:
50 per cent

Home price to income:
27 per cent

Source: OECD / Deutsche Bank

France's home prices are overvalued by 42%

Home price to rent:
49 per cent

Home price to income:
36 per cent

Source: OECD / Deutsche Bank

New Zealand's home prices are overvalued by 44%

Home price to rent:
69 per cent

Home price to income:
19 per cent

Source: OECD / Deutsche Bank

Norway's home prices are overvalued by 48%

Home price to rent:
70 per cent

Home price to income:
26 per cent

Source: OECD / Deutsche Bank

Canada's home prices are overvalued by 54%

Home price to rent:
73 per cent

Home price to income:
34 per cent

Source: OECD / Deutsche Bank

Belgium's home prices are overvalued by 56%

Home price to rent:
65 per cent

Home price to income:
48 per cent

Source: OECD / Deutsche Bank

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