Consumer credit growth poses housing risk if rates rise: S&P

Consumer credit growth poses housing risk if rates rise: S&P
Consumer credit growth poses housing risk if rates rise: S&P

The ratings agency S&P said there would not be a sharp price correction in Australian housing.

S&P analysts Craig Parker and Graeme Ferguson had a cautious view on Australian housing.

"We don't anticipate a sharp correction in house prices in the near term," the analysts said ahead of S&P's annual property outlook event in Sydney today.

"However, a scenario of the early 1990s where unemployment reached 11 percent would place households under severe financial stress.

"The degree of severity would depend on the speed and depth of the downturn."

Mr Parker pointed to the increase in total consumer credit as a percentage of total household assets as a major reason behind the rapid house price appreciation in Australia warning that could be a risk. 

"The rising household debt has lowered the headroom if the economy were to deteriorate or when interest rates rise."

Tags: 
Housing Affordability Interest Rates

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