Other economists caution that Australia's housing market is vulnerable to a crash, warning that complacency could leave homeowners and lenders exposed. They point out that despite recent slowdowns, many households carry high levels of mortgage debt accumulated during the years of rapid price increases.
This group emphasizes that rising interest rates combined with potential economic shocks, such as job losses or slower wage growth, could sharply reduce borrowers' ability to service loans. Such a scenario may trigger a cascade of forced sales, driving prices down quickly.
They also argue that government incentives, while supportive of buyers, might distort market signals and encourage over-leveraging. Without careful management, the risk of a broader financial crisis could increase through elevated defaults impacting banks and the economy.
Given these factors, this perspective calls for caution among policymakers and financial institutions to prepare for downside risks. They stress greater transparency and readiness to assist vulnerable borrowers to mitigate fallout if a sharper housing correction eventuates.