Housing headed for oversupply in Australia: report

A new analysis indicates Australia' s housing market could be oversupplied within three years, according to new economic data.

The residential building boom may already be its peak, says a report released on Monday by economic forecaster BIS Shrapnel.

It found the recent surge in home building would lead to a " mild oversupply" by 2018.

Dwelling approvals reached a record high of just more than 210, 000 in the last financial year.

"Low interest rates have unlocked significant pent-up demand and underpinned the current boom in activity, but as population growth slows while construction activity remains strong, new supply will begin to outpace demand," BIS Shrapnel associate director Kim Hawtrey said in a statement.

"This will see the national deficiency of dwellings gradually eroded and some key markets will begin to display signs of oversupply."

The latest figures estimate housing stocks reached a low of 108, 000 in June last year.

Any fall in activity would mostly be felt in the higher-density apartment market, Hawtrey said.

Western Australia is expected to see the sharpest slowdown, with residential building starts forecast to fall 13 percent in 2015-16 with the continuing decline of the mining industry.

Melbourne building is expected to slow while Queensland is expected to be flat.

New South Wales was the only state expected to grow.