Spring's most vulnerable property markets: Robert Gottliebsen

Dwellings with price tags above $1 million where there are no Chinese buyers in the market are the most vulnerable to price falls, in the spring selling season, according to the business columnist Robert Gottliebsen.

"We are watching a concentrated squeeze on the housing market the like of which we have not seen for a long time," he advised his readers in The Australian.

Large areas of the dwelling market are looking soft, particularly in Sydney and Brisbane, partly as a result of tighter bank credit in recent months on investors, he suggested.

"The bank finance squeeze is set to get tighter as several banks are becoming much more serious in implementing an APRA-imposed lending curb on residential homebuyers."

Gottliebsen says an important issue is that many buyers who entered into large loans in the recent past believed their income would rise.

"Not only has it not increased but there is now greater job insecurity and this is lifting stress levels.

"Falls in the price of dwellings will lift those stress levels," he said.

"The great risk is that as prices start falling there will be a bank panic, which tightens lending further.

"I don’t think this will happen this time because hopefully the banks understand that their liberal lending policies are a key reason the prices of dwellings have risen so far.

"Obviously there have been other forces, including supply restrictions, but if the banks cause severe price falls it will lift the levels of bank problem loans and reduce activity in the building industry.

"They are trapped," he concluded.