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Commercial Property and Financial Stability - An International Perspective

Author

Listed:
  • Luci Ellis

    (Reserve Bank of Australia)

  • Chris Naughtin

    (Reserve Bank of Australia)

Abstract

Commercial property and property development have historically posed a greater direct risk to financial institutions’ balance sheets than have housing and mortgage markets. A number of factors contribute to this: banks’ commercial property lending is concentrated in loans for construction and development, which tend to be risky; imbalances can build up further because construction lags are longer; and incentives to avoid default are weaker for borrowers in the commercial property sector than they are for home loan borrowers. Conditions in global commercial property markets have been especially challenging in the current cycle.

Suggested Citation

  • Luci Ellis & Chris Naughtin, 2010. "Commercial Property and Financial Stability - An International Perspective," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 25-30, June.
    • Handle: RePEc:rba:rbabul:jun2010-04
    as

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    File URL: https://www.rba.gov.au/publications/bulletin/2010/jun/pdf/bu-0610-4.pdf
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    Citations

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    Cited by:

    1. Frank Packer & Timothy Riddiough, 2012. "Securitisation and the Commercial Property Cycle," RBA Annual Conference Volume (Discontinued), in: Alexandra Heath & Frank Packer & Callan Windsor (ed.),Property Markets and Financial Stability, Reserve Bank of Australia.
    2. Luke Hartigan & Michelle Wright, 2021. "Financial Conditions and Downside Risk to Economic Activity in Australia," RBA Research Discussion Papers rdp2021-03, Reserve Bank of Australia.
    3. Kevin Davis, 2011. "The Australian Financial System in the 2000s: Dodging the Bullet," RBA Annual Conference Volume (Discontinued), in: Hugo Gerard & Jonathan Kearns (ed.),The Australian Economy in the 2000s, Reserve Bank of Australia.
    4. Kevin Lane & Adam Sinclair & David Orsmond, 2014. "Foreign Investment in Australian Commercial Property," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 21-26, September.
    5. Luci Ellis & Mariano Kulish & Stephanie Wallace, 2012. "Property Market Cycles as Paths to Financial Distress," RBA Annual Conference Volume (Discontinued), in: Alexandra Heath & Frank Packer & Callan Windsor (ed.),Property Markets and Financial Stability, Reserve Bank of Australia.
    6. Luke Hartigan & Michelle Wright, 2023. "Monitoring Financial Conditions and Downside Risk to Economic Activity in Australia," The Economic Record, The Economic Society of Australia, vol. 99(325), pages 253-287, June.
    7. Frank Packer & Timothy Riddiough & Jimmy Shek, 2014. "A Global Tour of Commercial Property and REIT Markets," International Real Estate Review, Global Social Science Institute, vol. 17(2), pages 241-274.
    8. Chris Hunt, 2015. "Economic implications of high and rising household indebtedness," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 78, pages 1-12, March.
    9. Robert Leszczynski & Krzysztof Olszewski, 2015. "Commercial property price index for Poland," Bank i Kredyt, Narodowy Bank Polski, vol. 46(6), pages 565-578.
    10. Hana Hejlova & Michal Hlavacek & Blanka Vackova, 2020. "Estimating Commercial Property Price Misalignment in the CEE Countries," Working Papers 2020/11, Czech National Bank.
    11. Krzysztof Olszewski, 2013. "The Commercial Real Estate Market, Central Bank Monitoring and Macroprudential Policy," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 5(2), pages 213-250, December.
    12. Alexander Khreish, 2024. "Evaluating Australia's financial conditions: A comparative analysis and extension of a dynamic factor model index," Australian Economic Papers, Wiley Blackwell, vol. 63(S1), pages 47-58, May.
    13. Patrick van Roy & Gaia Barbic & Anne Koban & Charalampos Kouratzoglou, 2017. "Use of credit registers to monitor financial stability risks: A cross-country application to sectoral risk," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Data needs and Statistics compilation for macroprudential analysis, volume 46, Bank for International Settlements.
    14. Zhu, Bing & van Dijk, Dorinth & Lizieri, Colin, 2024. "Price diffusion across international private commercial real estate markets," Journal of International Money and Finance, Elsevier, vol. 140(C).
    15. David Rodgers, 2015. "Credit Losses at Australian Banks: 1980–2013," RBA Research Discussion Papers rdp2015-06, Reserve Bank of Australia.

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