Property price rises behind increased uptake of home loans

Tuesday 22 May 2012

Article by Mozo

Increasing property prices were the main reason for higher uptake of owner-occupied home loans between 1995 and 2011, it has been confirmed.

The clamour for credit was intense during this period, but it was unclear as to where the bulk of the demand was coming from.

However, a new survey conducted by Credit Suisse has revealed that 55 per cent of the growth was attributed to the rising value of properties, the Sydney Morning Herald reports.

This essentially means that rising house prices were behind much of the increased demand, rather than population growth or hikes in the number of loans being issued.

Prices spiralled upwards throughout the 17-year period and growth in owner-occupied housing credit was worth $378 billion.

"We see overvalued Australian house prices as primarily a medium-term risk to housing credit growth rather than to housing credit losses," banking analyst at Credit Suisse Jarrod Martin told the news provider.

However, house prices have tumbled since the turn of the year, which should encourage first-time buyers to get a foot on to the property ladder.

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Property price rises behind increased uptake of home loans

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