Just days after Reserve Bank senior research manager Peter Tulip described Australian property as 30% undervalued, a leading investment bank has now suggested prices are 12% overvalued and urged leaders to introduce tougher measures to make property prices fairer.

Barclays chief economist for Australia, Kieran Davies, has produced an economic modeal that concludes that prices across Australia are unfairly high, based on factors including the gap between household income and mortgage rates, an ageing population and the working demographic.

“As we have long remarked, house prices have appeared expensive relative to both household incomes and rents for more than a decade now,” says Davies. “The problem with these simple valuation measures is that the recent experience is unprecedented and it is not clear to us when they will correct, or even if they will fully revert to their long-term averages.”

Already this year, average prices across the country have risen 10%, and are around 15% up year-on-year. In all, property is now valued 50% higher than before the global crash.

This overvaluation is the third highest on record, after the 22% figure of 2003 and the 14% declared in 1989.

Sydney Harbour