The Most Overpriced Housing Markets In The Developed World

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 percent.

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 percent

Home price to income:
-38 percent

Source: OECD / Deutsche Bank

Germany's home prices are undervalued by 26%

Home price to rent:
-22 percent

Home price to income:
-31 percent

Source: OECD / Deutsche Bank

Korea's home prices are undervalued by 14%

Home price to rent:
11 percent

Home price to income:
-38 percent

Source: OECD / Deutsche Bank

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