Global rating agency Finch Ratings has announced it will start stress testing Australian Banks after a flood of inquiries questioning the sustainability of Australia’s housing bubble.
Ben McCarthy, Finch Rating’s Australian Managing Director said “Over the last few months, Fitch has received numerous enquiries as to the sustainability of Australian residential property prices and the possible impacts of a correction,”
With Australian Banks “well” capitalised with residential property, estimated to be as much as 60 percent, there is just concern about what the impacts will be when the bubble pops.
“A housing bubble is the one overhang of the Australian economy, with proponents arguing that with Australian banks having 60 per cent of their loan books secured by residential property, the entire Australian economy is very highly leveraged to a domestic asset bubble,” said CMC Markets international equities dealer David Barrett-Lennard.
» Housing stress test spooks market – Sydney Morning Herald, 29th September 2010.