Canada, New Zealand and Sweden have more than a 50% chance of experiencing housing market crashes, according to Oxford Economics.

The three countries were identified as being most vulnerable to a crash – defined by price drops of more than 10% – while the US and UK were also flagged as having elevated chances of a crash, at 35% and 25%, respectively.

The consultancy’s baseline forecasts suggest Canada, New Zealand and Sweden will experience peak-to-trough falls of 30%, 20% and 15%, respectively.

Oxford Economics’s modelling takes into account the strentgh of labour markets, which it says has been missing from recent analysis of housing markets which has “focused heavily on the impact of rising mortgage rates”.

In a research briefing, chief global economist Innes McFee said: “While this is clearly important, our analysis shows that labour markets have often been the decisive factor in determining the severity of the housing market downturn.

“If employment drops, this raises the number of forced sellers and ensures house prices fall markedly. History shows that if labour markets can remain strong, then the chances of a more benign correction are higher.”