Unemployment won't stop house price rises: Macquarie Wealth

Unemployment remains a concern, but perhaps not when it comes to house price growth, according to recent Macquarie Wealth Management research.

They note counter-intuitively that a rise in unemployment typically sees house prices move higher.

"Whilst unemployment is a key factor to be cognisant of for housing demand, the below table indicates that prior cycles exhibiting a strong rise in unemployment typically illicit a policy response from the RBA (i.e. rate cuts) which sees house prices actually increase as unemployment rises," the January report to clients noted.

It looked at five recent cyclical employment downturns going back to the 1980s.

"In the 1990 recession the unemployment rate increased ~180bps to 10.7%, but house prices increased ~8% in the following 12 months factoring a ~200bps decline in the cash rate. 

A similar scenario was seen post the GFC," the report noted.

Rising unemployment is likely heighten risks of mortgage delinquencies, according to Genworth Mortgage Insurance Australia.

Ellie Comerford, chief executive of Genworth in Australia, expects expects its loss ratios to climb from its current 19 per cent to 25 to 30 per cent for the full 2015 financial year.

Ms Comerford's comments to the Australian Financial Review came after Genworth posted a $172.7 million statutory net profit for the six months to December, due primarily to lower than expected claims and a strong housing market. The result was a 52 per cent improvement to the prior corresponding period

Genworth's share price sits around $4.20, up 60 per cent since its public debut in May, compared with the 6 per cent gains of the benchmark S&P/ASX200 Index.