Australia’s housing market in trouble, report claims

Adam Smith 6 September 2016

housing bubbleAn investment house has claimed Australia’s housing market is heading for a correction.

A study by CLSA has claimed Australia’s housing market is headed for a downward trend, Business Insider has reported.

“We believe the housing cycle has peaked and that new construction will decline over the next two years,” the study said.

CLSA claimed some apartments may struggle to reach “reasonable levels of settlement” over the next few years, sending smaller private developers into receivership.

Settlement fears for apartments

“This will expand into surrounding apartment buildings. While we believe that there will be limited settlement risk on high quality flats, it will result in a sharp slowdown in new apartment developments,” the investment firm said.

While the firm forecast defaults for small developers and a “sharp contraction” for apartment construction, it said this was unlikely to lead to sharp price declines for other regions, Business Insider reported.

“Our worst-case scenario would result in dwelling prices falling sharply in all areas, eventually leading to a recession.”

CLSA said tightened restrictions on investment lending could be the catalyst for the downturn.

“Regulations, enforcement and fees have increased and the free flow of capital from China has been curtailed,” CLSA said.

Latest home loans headlines

Image: Shutterstock

Ask a Question

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the privacy policy, receive follow up emails related to and to create a user account where further replies to your questions will be sent.

Ask a question