Australia on the brink of a housing correction, claims economist

by Julia Corderoy21 Jan 2015
A global research company says Australia is on the brink of a housing correction, as its forecast for the Australian economy remains “downbeat”.

The recent upswing phase – which has seen house prices in Sydney surge 30% over the past two years – is expected to change in the coming months, according to Guy Bruten, a senior economist for AllianceBernstein.

“… with signs of oversupply starting to emerge in pockets of the market, and with APRA … starting to offer “guidance”—a weak form of macro prudential policy—one wonders how long this can continue,” he said in a note to investors.

“There’s a clear risk that falling house prices may be the next phase in the post-commodity-boom adjustment story.”

This sentiment echoes the latest home lending figures released by the Australian Bureau of Statistics, which revealed that the number of new home loan commitments dropped 0.7% in November. Excluding the refinancing of dwellings, the number of loans was down by 0.8%.

Bruten also says it would be “unwise” to be swayed by last week’s “better-than-expected” labour figures, which raised the question of whether we are seeing a fundamental turnaround in the Australian economy. He says Australia’s economy is still fundamentally bearish.

“Despite a couple of better jobs readings, we remain downbeat about Australia’s prospects for the next few years. 

“The long shadow of the commodity price bust remains the key theme. The next phase? Weaker LNG prices and, perhaps, the long-anticipated housing correction,” he said in the note to investors.


  • by Tony 21/01/2015 9:14:10 AM

    When I read the title of this article I thought here we go, Professor Steven Keen has been let loose again but much to my surprise it is not him predicting doom and glow aka correction. Can someone tell me where the oversupply is so I can snap up a bargain?

  • by Andrew Melling 21/01/2015 9:18:38 AM

    We've all seen this type of article for years. Eventually they will be right!

  • by Wozza 21/01/2015 9:43:56 AM

    Wasn't December a record settlement month for brokers and banks right across the country? I had my best lodgement month for 2014 in December as well! Heard it all before!