Forget bubbles, Australian homes are severely undervalued according to a senior figure from the Reserve Bank of Australia (RBA).

Speaking at the Australian Conference of Economists in Brisbane earlier this week, RBA senior research manager Peter Tulip said the preliminary results from research he had co-authored showed that homes are in Australia are undervalued by 30%.

Dr Tulip said the figure, which was not the official stance of the RBA, was the result of research that compared the cost of renting and buying identical properties.

“We find that owning a house costs 30% less than renting," Dr Tulip said. 

"That is, houses are 30% undervalued.”

According to the research, owning a home bought in April this year would likely have an annual cost of 2.7% of the home’s value, while the annual cost of renting the same home would be 3.9% of its value.

Dr Tulip said the difference in the two figures showed owning a house was the more affordable than any time in the past three decades.

"It's unusually wide, the widest in at least 30 years. I can take you back further but the data quality deteriorates the further we go back,” he said.

"Under our assumptions, owning a home is now more attractive, relative to renting, than it has been at any time in the past 30 years."

Dr Tulip said the substantial decrease in interest rates had improved affordability in recent times.

“Just one year ago when we last published results, we found that houses were fairly valued — that is, the cost of buying was about the same as the cost of renting,” he said

"What has changed since then is that real long-term interest rates have fallen substantially. That fall made housing more attractive relative to renting, despite the increase in prices."