oz banks could trigger a property crash

How Australia's banks could trigger a property crash

..International investors refuse to extend our banks credit at a reasonable price. This forces the banks to pass on additional costs to their customers and, in some cases, refuse credit.

These tight credit conditions could squeeze property developers and highly-geared property investors alike. Many developers would be forced to offload housing stock quickly- by reducing sale prices - to raise cash to repay their loans as they fell due and/or cover the increasing costs of their debt.

Ordinary property investors would face a similar squeeze; seeing prices fall and facing growing debt-servicing costs. Some would be forced to sell into a falling market, pushing prices even lower.

In effect, we'd witness the reverse of the positive feedback loop we've seen in the property market for many years. Instead of positive sentiment driving prices higher, negative sentiment, a lack of available credit and higher interest costs would push prices lower...

http://www.smh.com.au/business/property/how-australias-banks-could-trigger-a-property-crash-20100802-1125e.html