Fitch: Sydney Property Prices Rise Ahead of Rest of Australia
Fitch analyses changes in property prices based on regions, as it highlights where borrowers may experience a downturn in the housing market, which could lead to deterioration in mortgage performance.
The current rate of increase in property prices is similar to that of the 2001-2003 boom, but growth is less widespread. In the 2001-2003 boom, by number of regions, an average 95% of Australia experienced property price growth compared with 60% during the current boom.
Fitch's ratings of Australian RMBS and covered bonds factor in property price movements, with Fitch applying a 50% credit to property price increases while taking into account 100% of any property price decrease. A market-value decline of between 56.6% to 62.3% is applied to properties in Sydney, in a 'AAAsf' stress scenario, to capture any extreme movements in property prices.
The full report, which is part of Fitch's "Asia-Pacific Structured Finance Chart of the Month" series that highlights topical issues in the region, can be found at www.fitchratings.com.
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