US think tank claims Australian property headed for collapse
A US-based think tank has argued that Australia is mere weeks away from a housing collapse.
According to a report by news.com.au, US-based defence think tank International Strategic Studies Association has warned that Australian banks are precipitating a market collapse by winding back lending to foreign investors. A report from the group has predicted that “anticipatory caution on the part of Australian banks may accelerate a decline in the Australian economy”.
The group’s president Gregory Copley told news.com.au a housing collapse could be imminent.
“We estimate that Australia has about six weeks or so to turn this situation around, otherwise there would be a massive hit on property valuations and the building trades. The urgency is, I believe, based on the fact that this is about how long it will take for the banks’ policies to start switching off a lot of existing and planned contracts for Australian properties,” Copley said.
Copley said Australian banks “clearly believe Australian real estate values will decline”, but wanted to avoid the risk by pulling back their own exposure to the property market.
“In so doing, they precipitate the market collapse but are less exposed to it,” he told news.com.au.
NAB chief economist Alan Oster told news.com.au that ISSA’s prediction was “garbage”.
“To get any sort of problem you’ve really got to have something going wrong in China and then everybody selling their apartments at the same time. If they do that then it’s not an Australian problem, that’s a global problem,” Oster said.
The ISSA report follows a report from CLSA that claimed a wave of failed settlements on apartments could see some developers collapse and lead to a housing market downturn.