Ratings agency Moodys has indicated Australia house prices are simply not sustainable based on simple metrics and has placed Australia’s mortgage insurance industry on negative watch.
Ilya Serov, lead analyst at Moody’s said “Capital city house prices have more than quadrupled and household debt has tripled since 1990. Simple metrics indicate that the current price levels are not sustainable,”. Moody’s believe the Eurozone crisis represents a material threat to Australia’s housing bubble which could lead to US style property crash.
The report from Moody’s follows similar concerns from the Economist magazine who indicate on a rent to price metric, Australian housing is 53 percent overvalued and 38 percent overvalued on a income to price metric. The economist warned the Australia, Belgium, Canada and France housing markets are now more overvalued than at the peak of the U.S. housing bubble.
» Australian house prices not sustainable, says Moody’s – Adelaide Now, 14th December 2011.