Australia has a housing bubble that is probably the most obvious in the world, according to one British economist, Chris Watling of the London-based research firm Longview Economics. Watling believes it wouldn't take much for Australia's property bubble to burst, and that the country could be headed for a recession within the next 12 to 18 months.

Watling was quoted in an article titled "Is Australia Sliding into Recession?" in The Wall Street Journal which examined Australia's 24 year run without any serious economic downturn. Watling holds this view because he sees Australia through the prism of the Netherlands, which underwent a lengthy period of economic expansion before a debt-fueled housing bubble burst in 2008.

The article also quotes Credit Suisse Sydney analyst Damien Boey who believes even a slight cooling in Australia's housing market could cause a recession. "There's a decent chance of recession over the next year," said Boey. "We just have to see house prices flatten out to get much more bearish on growth."

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