House prices overvalued by 20 per cent

AMP Capital Investors said the house price bounce experienced in recent times was unlikely to mark the start of a sustained recovery. “Our assessment is that house prices may have a bounce but this is unlikely to mark the start of a sustained recovery,” said chief economist Shane Oliver said. “Australian housing remains 20 per cent or so overvalued, it is amongst the world's most expensive, housing affordability remains poor and low rental yields will keep investors away for some time,” he said. “Even if prices do look like reaccelerating it will only invite another interest rate rise by the Reserve Bank.”

Advertisement