Jeremy Lawson, a former senior economist at the Reserve Bank of Australia, has warned that local housing prices could be as much as 30 per cent above fair value, The Australian Financial Review reports.
Mr Lawson, who currently serves as global chief economist at Standard Life, said the long-term outlook for Australian property was not particularly promising.
“[It is] reasonable to assume that future house prices will grow in line with real household disposable income as the commodity boom unwinds,” he told the AFR.
“That would imply overvaluation of between 20 per cent and 30 per cent,” he told the paper, pointing to a fresh valuation model from the RBA.
Mr Lawson added that the high household debt-to-income ratio in Australia leaves the country exposed should there be another economic shock offshore.