Are Australian house prices really 30% undervalued?

According to Peter Tulip, an official at the Reserve Bank of Australia (RBA), Australian house prices are now 30% undervalued.In the original research paper he and colleague Ryan Fox published last year (available at the RBA website), they concluded that house prices were then fairly valued. But after updating the analysis to reflect the subsequent decline in real long-term interest rates, Tulip and Fox have concluded that house prices are now 30% undervalued, even after the rise in prices since then.On first hearing of this claim, I thought it was a joke. Apparently not. This is a serious claim and...

According to Peter Tulip, an official at the Reserve Bank of Australia (RBA), Australian house prices are now 30% undervalued.

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