Wealthy will weather property downturn

Wealthy will weather property downturn

There is a fierce debate about housing prices in Australia, with the arguments ranging from property prices being wildly overvalued through to supply merely catching up with demand.

The Reserve Bank has been conservative in their commentary, and their biannual Financial Stability Review outlined a more nuanced picture of the housing market.

The key table is below, and it shows that most housing investor debt is owed by high-income households with the ability to service their payments when property price growth moderates.

Property investor debt by income quintile The Australian Financial Review/Edmund Tadros

The Reserve Bank analysed the types of households and the ages of the growing crop of housing investors and found it was the highest-income households that owed most (60 per cent) of the total investor housing debt.

These investors were “fairly well placed to service their debt” and “typically (used) less than 30 per cent of their income to service their total property debt”, the central bank found in its biannual Financial Stability Review, released on Wednesday.

Read more about property investor debt at The Australian Financial Review.


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