Home price growth unsustainable: Fitch Ratings

Home price growth unsustainable: Fitch Ratings
Jonathan ChancellorMarch 17, 2015

Fitch Ratings believes the current yearly rate of home-price growth is unsustainable, particularly in the Sydney and Melbourne markets.

The combined capital city index grew 7.94% year on year, led by Sydney, Melbourne and Brisbane.

It notes the growth rate remains high, but has continued to ease since the peak in April 2014.

Changes in home prices:

Source: CoreLogic RP Data, Fitch

But it added gains in property prices have historically resulted in a decrease in 90 plus days arrears, suggesting that high house prices allow borrowers to sell properties and clear arrears.

The report noted 30+plus days delinquencies increased by 7 basic points to 1.15% in 4Q14 despite the low interest rates, high house prices, and competitive lending.

However, performance was still better than a year before.

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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