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Analysts are predicting a crash in the Australian housing market, specifically in the outer-lying suburbs of Melbourne, where prices have grown exceptionally quickly in recent months. To be precise prices rose some 44.6% in Cranbourne South in the 11 months ending November last year, and 23.8% in Narre Warren North during the same period.

"The higher you rise the harder you fall, potentially," said BIS Shrapnel senior economist Jason Anderson.

"With interest rates going up you could see outright declines in outlying (Melbourne) suburbs," Mr Anderson said.

However, Anderson conceded that the fact that homeowner bonuses were far larger than they are now in the period when rapid growth took place, because home-buyers were combining the state bonuses, with the federal bonuses. The state bonus in Victoria gives home-buyers $2000 for an established home and $11,000 for a new home, and the federal bonuses, up to another $21,000.

"It was the biggest of the state bonuses and that is still in place until the end of June," Mr Anderson said.

The federal boost scheme ended in December. November is also about the time when banks started to raise interest rates for fear of a crash.Australia became the first G20 nation to put interest rates up, when its central bank did so, but it also went further and advised banks to increase rates even further independently, which many of them did. It is easy to say that November was several months ago any crash would surely already have happened, but the latest figures do show sales volumes dropping off considerably, so prices falling again can’t be ruled out.

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