PHOTO: UBS’ Jonathan Mott currently forecasts conditions as reflecting the third scenario – a housing correction – but warns the risk of a credit crunch “is real and rising”.
Australian house prices could plunge 30 per cent under a “deep recession” scenario analysis conducted by global banking group UBS.
In the worst of five cases assembled by UBS analyst Jonathan Mott, Australia’s 27-year economic expansion ends, unemployment climbs and the central bank cuts interest rates to zero, according to a research report published this week.
The scenarios modelled by Mr Mott include strong economy, muddle through, housing correction, credit crunch, and deep recession and mortgage mis-selling.
Mr Mott currently forecasts conditions as reflecting the third scenario – a housing correction – but warns the risk of a credit crunch “is real and rising”.
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