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Commercial Property and Financial Stability - An International Perspective


  • Luci Ellis

    (Reserve Bank of Australia)

  • Chris Naughtin

    (Reserve Bank of Australia)


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, Reserve Bank of Australia, pages 25-30, June.
  • Handle: RePEc:rba:rbabul:jun2010-04

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    References listed on IDEAS

    1. Kulish Mariano & Kent Christopher & Smith Kathryn, 2010. "Aging, Retirement, and Savings: A General Equilibrium Analysis," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-32, July.
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    Cited by:

    1. Frank Packer & Timothy Riddiough, 2012. "Securitisation and the Commercial Property Cycle," RBA Annual Conference Volume,in: Alexandra Heath & Frank Packer & Callan Windsor (ed.), Property Markets and Financial Stability Reserve Bank of Australia.
    2. Kevin Davis, 2011. "The Australian Financial System in the 2000s: Dodging the Bullet," RBA Annual Conference Volume,in: Hugo Gerard & Jonathan Kearns (ed.), The Australian Economy in the 2000s Reserve Bank of Australia.
    3. Luci Ellis & Mariano Kulish & Stephanie Wallace, 2012. "Property Market Cycles as Paths to Financial Distress," RBA Annual Conference Volume,in: Alexandra Heath & Frank Packer & Callan Windsor (ed.), Property Markets and Financial Stability Reserve Bank of Australia.
    4. 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.
    5. Robert Leszczynski & Krzysztof Olszewski, 2015. "Commercial property price index for Poland," Bank i Kredyt, Narodowy Bank Polski, vol. 46(6), pages 565-578.
    6. Krzysztof Olszewski, 2013. "The Commercial Real Estate Market, Central Bank Monitoring and Macroprudential Policy," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 5(2), pages 213-250, December.
    7. David Rodgers, 2015. "Credit Losses at Australian Banks: 1980–2013," RBA Research Discussion Papers rdp2015-06, Reserve Bank of Australia.


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