''This isn't a credit crunch; this is a borrowers' strike,''
Paul Osborne, head of the buyer advocacy firm Secret Agent, says 2012 may prove to be the toughest year in a decade for real estate.
Mr Osborne is forecasting ''price erosion'' in suburbs with high levels of household debt, as well as in suburbs that have a high turnover rate of properties.
Australians are now saving at record levels. At the same time, local banks are finding it harder to borrow from overseas banks, so there is a shortage of new credit entering the Australian financial system, which will cause real estate prices to struggle, according to Mr Osborne.
Damian Smith agrees that sourcing new funds from overseas is becoming a critical issue. But he says the biggest issue facing lenders at the moment is that not enough people are borrowing.
In the 12 months to September this year, there was about $3.5 billion less in new home loans written in Australia compared with the previous 12 months.
