Australia Housing 'Perilously Close' to 'Disorderly' Correction

The American housing market is not the only one in for a correction. Australia's record-low rates, glut of apartments, and tight lending all point to an incoming crash, writes columnist David Fickling.

Over the course of this century, approvals for building single-family detached homes have dwindled in Australia as approvals for high-rises have proliferated, offering added supply in a country where population growth has regularly outstripped construction. Yet, the Sydney property market is now dropping 11.1 percent, its greatest downturn in nearly four decades, and Fickling writes that the shift in construction toward big multifamily projects "risks a further leg down in a real-estate crash that’s starting to threaten the economy," similar to downturns taking place in other global markets. Fickling usefully points out in his column for Bloomberg that a glut of apartments makes the market overall far less nimble as it reacts to and absorbs demand dynamic changes in the market.

For people in the U.S., the American Dream is a vision of broadly shared prosperity, freedom and opportunity. Xi Jinping’s Chinese Dream focuses on rising incomes and national renewal. Australians once had a simpler aspiration: owning a detached suburban home on a quarter-acre of land.That vision died a while ago.

Back in the 1980s, single-family detached homes comprised about three-quarters of building approvals, and even through the 1990s and 2000s the proportion was still around two-thirds. Since then, it’s plummeted to less than half, with high-rises taking up an increasing share of Australia’s traditionally single-story skylines.

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