Sentiment in the so-called 'lucky country' has deteriorated sharply, analysts told CNBC.
Australia's stock market has fallen 8 percent since the start of September, weighed by concerns over global economic growth, steep declines in commodity prices and the state of Australia's property market.
"Investor sentiment has certainly collapsed across a range of measures," Shane Oliver, head of investment strategy at AMP Capital, told CNBC.
Investors are much more concerned about the prospect of a market downturn and the state of Australia's housing market than they were in the second quarter of this year, a survey of fixed income investors by Fitch Ratings showed on Wednesday.
79 percent of respondents flagged a downturn as a high or moderate risk, up from 43 percent in Fitch's second quarter survey. The frothy housing market was high on respondents' worry list; 53 percent expect house prices to rise by 2 to 10 percent in 2015.
"The concerns demonstrated in the Fitch Ratings survey are very clearly the case," said Evan Lucas, market strategist at IG. "Housing is a major part of Australia confidence, [so] any issues around housing and wages are going to see sentiment fall."
Red hot property
Australian dwelling values rose 9.3 percent over the 12 months to September, spurred by a record 15-month run of historically low interest rates. Values in Sydney and Melbourne rose 14.3 percent and 8.1 percent, respectively, over that period, RP Data figures show.
And in recent months, the Reserve Bank of Australia warned of regulatory steps to rein in loans to investors.