The current market conditions in Australia do not imply a serious correction when compared to home markets worldwide, said an economist.

“I would say also, if you look at prices per square foot, Australian housing prices are not out of line globally, so you should not overstate the downturn in the housing market,” Richard Barkham said during CBRE’s annual market outlook event.

Barkham said that Australia is slightly exposed on the construction side. The share of construction as a percentage of GDP is relatively high. Hence, the downturn in the housing market feeds through construction.

The Australian economy, though, has a lot of monetary policy options. The central bank can cut interest rates, and the government balance sheet is extremely healthy, he said.

“It seems to me that there are headwinds for the Australian economy, and it does need to rethink its place in a de-globalising world, [but] the outlook is reasonably good,” Barkham said.

Meanwhile, Henry Chin, CBRE’s APAC/EMEA head of research, and Bradley Speers, Australian head of research, assessed more closely the economic and real estate conditions in the APAC region.

Speers said that one of the major considerations for the Australian market was the upcoming federal election—which could have a profound impact on the residential sector—given Labor’s commitment to abolishing negative gearing for existing homes.

“There’s a lot of conjecture on what this might do to the housing market, but I think two things are important. One is that negative gearing will remain for new housing stock and two, Australia needs around 170,000 new dwellings per year, so the changes in negative gearing might just skew who is delivering and owning that stock, but we do need to deliver new housing supply,” Speers said.