Via Scott Haslem at the AFR:
The housing outlook warrants significant caution. The high level of household debt remains a vulnerability, particularly in the event of an adverse shock to the economy and the potential for loan defaults and weaker consumer spending to feed back into weak activity. But Australian banks have substantially strengthened their capital positions over the past decade. Lending standards have been more strictly applied over recent years and loans for high loan-to-value ratios have been reduced.
While the outlook is always uncertain, with the jobs market firm and no anticipated sharp rise in unemployment on the horizon, it seems more likely that weakening housing activity will remain a persistent and significant problem for growth over the coming year or so – with lower house prices and slowing loan growth – rather than developing into a systemic or recession-like event.
