The Australian housing sector is doing its part in helping the economy rebalance as mining investment slows.

· Thanks largely to a persistent undersupply of new homes, Australian housing remains overvalued. Negative gearing, foreign and SMSF buying are just a sideshow to the supply shortage.

· The home buyer market is still not seeing the bubble conditions of a decade ago, but the market is too hot in parts and the risks have grown. Expect increasing jawboning from the RBA with a rising likelihood of credit growth restrictions for investors if it doesn’t slow soon.

· The medium term return outlook for residential property is likely to be very constrained.

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