While a ‘soft landing’ appears likely, we should be aware of remaining risks
The OECD’s survey into the Australian economy that puts housing sparely in the focus is the sort of thing that is likely to create a few conniptions. It isn’t helped when a separate post on the topic is titled “Australia’s cooling housing market; is the economy at risk?” Add in that on the same day the report is released, the latest housing finance figures show a continuing slowing. It’s enough to make you start investing in canned goods and candles. But for now at least the desired “soft landing” appears likely, and certainly the Reserve Bank will not be looking to increase interest rates.
The latest OECD report on Australia contains a few doomsday scenarios. For example, it notes that were there to be a “dramatic house-price correction” (ie downturn) it could “cut household consumption, prompt collapse in the construction sector, increase mortgage defaults and freeze bank lending to business”.
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