I was not surprised to learn yesterday that the OECD remains concerned about Australia’s housing market, which has shown signs of over-heating, particularly in Sydney, although the OECD did note that there are “receding risks from the housing boom” (see the Brisbane Times report OECD warns Australian property prices facing ‘dramatic and destabilising’ demise). The OECD is right to recommend that:
“Close vigilance on housing-market developments is still required.”
In Queensland, a significant risk for the next couple of years comes from the large supply shock that is occurring from all the new apartment developments we are seeing, particularly in inner city Brisbane. Commencement data for 2015 suggest a big surge in completions in 2016 (see chart below).
I have previously posted on the possible implications for unit prices:
As many units as houses approved in Queensland in last 12 months – is a unit price crash coming?
Queensland Economy Watch 
It’s refreshing to see a well respected institution such as the OECD point out the obvious of inflated Australian house prices. Most of the conversations to the contrary are from people and institutions which have a vested interest in perpetuating the myth that “this time it’s different” and “fundamentals are driving high house prices”. Which Government wants lower house prices? Which central bank governor wants a recession on heir watch? The OECD has no vested interests so it’s wise to pay attention to what they say rather than the “experts” who enjoy appearing in the media. On a first principles basis it may be the best view of house prices.
Yes, there are lots of people with vested interests commenting on the property market! Thanks for the comment, Alistair.
A crash? Perhaps not a crash – just a slow correction.
A great time to be a renter for once…
Yes, a slow correction is more likely, and we are already starting to see evidence of that. Thanks for the comment, Jim.