The International Monetary Fund has called on the Australian Residential Property sector to pay close attention to home values, as high property values pose certain risks that can negatively impact the industry.
Property values are continually on the rise, with Sydney leading with a year to date increase of 11.4%. The overall mortgage rate is at a 4 year low at 5.95%. Lending standards are also a concern with the low interest rates, 20% of loans account for LVR’s up to 90% of the property’s value. 40% of these loans have an LVR of 60 – 80%. These high risk loans should be reevaluated to ensure that lending standards, together with the clients’ best interest are kept as a priority.
Property home values should be kept at realistic levels. The IMF has advised to keep this in check to avoid overshooting expectations and to keep the values within level of demand.
Read more about this on the Global Property Guide website.