From Macquarie:
At some point, it’s going to become clear. The residential construction upswing in Australia is running ahead of underlying demand – which is declining as population growth falls. Whilst there is a degree of pent-up demand, this has already been factored into prices. Unlocking that demand will ultimately result in downward price pressure, in real terms, if not nominal. In our view, it’s a question of timing, and speed of adjustment. Investor curbs – both macro prudential and foreign – are acting to curb demand at a time when supply is accelerating. It’s still early days; the residential construction cycle still appears to have some legs. However, we remain wary of a slowdown in the contribution from residential construction to GDP in 1H16.
With the array of headwinds exhaustively discussed at MB, it is clear that the moment house prices slow Australia will confront recession.