SmartHomeOwners

TORONTO:  The Economist magazine's latest survey of global home prices claims that Canadian real estate is overvalued by 23.9 per cent.

The Economist determines fair value by comparing the current ratio of house prices to rent with the long-term average.

By that measure, Australia led the way among the overvalued markets, with homes 63.2 per cent more expensive than they should be, followed closely by Hong Kong, where the housing market was 58.1 per cent overvalued.

By comparison, the Economist says real estate in the United States is undervalued by 2.1 per cent, and houses in Japan are 34.6 per cent cheaper than their fair value.

The magazine says Canadian home prices rose by 4.5 per cent over the past year, and gained 70 per cent between 1997 and 2010.

Of the 20 countries tracked in the survey, only four posted year-over-year price declines. With the exception of Japan, which saw prices fall four per cent compared with last year, the biggest increases were in Asian countries.