Housing decline could see Australia in a recession by March 2016
House prices in Australia are set to plunge by 7.5%, fuelling fears that the country could be heading for a recession as early as March next year. Experts have warned that the nation's over-inflated housing market poses a bigger risk of recession than a Chinese economic crash. Credit Suisse says property investment in Australia is now “riskier than the equity market, particularly in New South Wales“. Research from investment bank Macquarie has suggested that house prices will start to fall in March 2016, only starting to recover in 2017.

House prices are set for a 7.5 per cent decline from March next year, with the resulting slowdown hitting the broader economy and risking a recession, economists have warned.

Several leading investment banks have tipped that Australia's housing market, which has been a driver of economic activity as mining has slowed, is close to peaking as household budgets are stretched and supply begins to outstrip demand.

Although softening prices would make the market more accessible to aspiring home owners, they could trap highly leveraged buyers and push up unemployment as the sector cooled.

Macquarie forecast in a research note on Monday that the nation was looking at a 7.5 per cent reduction from "peak to trough".