Rising house prices to trigger stress
By
Andrea Lavigne
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10/12/2009 12:00:00 AM
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House prices will rise up to 8% over the next 12 months putting further stress on affordability for many borrowers, says Fujitsu Consulting.
The latest Mortgage Stress-O-Metre report for November 2009 found significant migration, a re-emergence of property investors and easing unemployment concerns has created a strong demand for housing, which is driving up house prices.
The ratio of average house prices to average income in Australia is 7.15 times - much higher than the UK (6.2 times) and the US (3.5 times).
The report finds that there are approximately 577,000 households in some degree of mortgage pain, a drop from its peak of 900,000 in August 2008.
Unemployment expectations have come down to 6.75%, while interest rates are expected to climb to 5.5% by June 2010 and banks will lift mortgage rates by 30 basis points above as a result of funding costs.
Fujitsu's next Stress-O-Meter will be released in February 2010.
The full report can be viewed here.
Related stories:
Owner occupier lending drops 1.5% in October - The total number of seasonally adjusted loans for owner occupiers, excluding refinancing, dropped by 1.5% in October 2009 but was up by 37.4% compared to October 2008
Increase in job ads offset by seekers - Job ads increased by 5% in November, but the positive economic indicator is tempered by the high number of job seekers.
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