National Australia Bank logo is pictured on an automated teller machine in central Sydney
A National Australia Bank (NAB) logo is pictured on an automated teller machine (ATM) in central Sydney September 12, 2014. National Australia Bank, the country's No.4 lender by market value, said contingency plans for its Scottish-based subsidiary included moving to England if Scotland votes to end its 307-year union with the rest of the United Kingdom. Reuters/David Gray

The housing market in Australia has been marked as the second most overpriced in the world, according to a major banking group.

The Bank of International Settlements said that Australia was only second to Norway when it came to housing expenses. The BIS is considered as the central bank for central banks. Herald Sun reported that the price factors it considered in coming to a conclusion included wages, potential rental income and inflation. The BIS also said that the growth of the real property price had remained flat in the previous three years, even though the cost of housing in Australia was high. The study was conducted in 29 countries which also included Sweden and Canada.

It was the most recent quarterly review of BIS for international housing. The countries which are less expensive than Australia in terms of housing prices include Sweden and Great Britain. The average point on a seasonally and inflation-adjusted index of advanced economies of sample countries is 100 whereas Australia scored 200.

On the other hand, Australia scored 150 on a price-to-rent ratio. The historical average of the sample group is 100. Australia is behind only Norway, Canada and Sweden. Australia also scored high on the price-to-income ratio. Getting 140 points puts Tony Abbott's country on the second spot with New Zealand and Canada. The first spot went to Belgium.

According to the BIS, the present ratio means for the number of countries that the price movements did not diverge from rental values, implying "unsustainability." "For a number of other countries current property prices are much higher than those implied by the historical relationship to rents," the BIS added. The BIS also said that Australia could "expect a price correction in the future."

There are, however, indications that the property markets in Australia are cooling, and home-owners and investors may get surprised to know it. The Australian property market is generally considered to be "hot." The trend should also please the Reserve Bank of Australia, which is at risk of increasing the housing price further at the moment. BIS said that property prices in Australia had grown 7.7 per cent in the last one year.

Contact the writer: s.mukhopadhyay@ibtimes.com.au