Fears of a housing bubble continue to plague property investors as the residential crane index developed by global project management group Rider, Levell, Bucknall shows that its value has ballooned to 145 per cent since it was created in late 2013.

Property pessimists have also picked up a worsening trend in mortgage arrears. According to the monthly figures from credit rating agency Standard & Poor’s, arrears in securitisation transactions for prime residential mortgages rose for the seventh consecutive month, with most of the increase in the severe category of 90 days-plus overdue.

These two factors have led bubble alarmists to speculate that these are early warning signs of a looming property crash. With housing loans worth $1.5 trillion now making up nearly two-thirds of bank lending portfolios compared with less than a quarter in the early 1990s, it is safe to say that housing underpins the financial sector.

The Australian Prudential Regulation Authority have sought to enact measures to keep the housing sector in check. It has ratcheted up the scrutiny of home loan portfolios. It has also flagged a 10 per cent speed limit for growth in investor lending. Debt serviceability requirements have also been tightened.

According to CLSA analyst Brian Johnson, the housing market’s ‘bubblish’ characteristics are driven by low interest rates and favourable tax treatments, low unemployment, a supply imbalance, deteriorating credit standards, and a lack of credit demand by businesses, leaving houses as the only source of credit growth.

Will the bubble burst? “As long as the five factors continue, the bubble could get bigger,” Johnson said.