Index Charts Affordability Of Housing Worldwide

By Fiona Moore, for 08 September, 2014

New figures show that Australian property was "overpriced" by 33 percent in the first quarter of 2014 when measured against average net incomes. Canada, New Zealand, and France were close behind.

The findings appear in the Economist's latest house-price index. The measure takes as its baseline (100) the long-term average ratio of disposable incomes relative to house prices, looking at whether housing in major economies is becoming more or less expensive relative to persons' income.

There is no recent data for Belgium, which was said to have the most overpriced property in Q4 2013 (46 percent). Properties in China and Japan were most affordable, being "underpriced" by about 40 percent. In Germany, property was said to be 15 percent underpriced. Property in Spain is overpriced by just over 10 percent, down from 17.6 percent last year, and down markedly from a historic high of 58.5 percent in Q4 2006.

The index also looks at house prices relative to rental costs. According to this metric, the most overpriced location to purchase property, rather than to rent, was Hong Kong (overvalued by 77 percent), followed by Canada and New Zealand (both at about 74 percent).

The Economist explained that, taken together, the two measurements show that properties were overvalued by at least 25 percent in nine countries.

Tags: Australia | China | Canada | France | Germany | Hong Kong | New Zealand | Spain | Japan | Expats | Investment | Property Investment | Invest | Investment |


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