Bruce MacKinnon's cartoon for The Chronicle Herald

Australia is unlikely to see a London-style housing crash in the near term while rental vacancies remain very low and population growth continues to outpace new housing supply. A nationwide drop would likely require several shocks at once, such as rising unemployment, a sharp fall in migration, tighter credit and a spike in forced sales. The more probable outcome is uneven performance by city and dwelling type, with apartments in oversupplied pockets more vulnerable than detached houses in land constrained suburbs.

When it comes to the vacancy rate, UBS sees little room left for further decline. The shortage of supply has become even more pronounced, especially for small and medium-sized apartments.