SQM Research managing director Louis Christopher has predicted house prices will return to growth in 2012. While he conceded this was a “relatively bullish scenario”, Christopher said it was a scenario that depended largely on what happens in Europe.
“Yes, Europe is the key. The risk is clear and present.”
Large scale banking defaults in the eurozone would likely cause a credit squeeze in Australia, causing the banks to “ration housing credit” and reduce LVRs.
“Of course, if the squeeze is large enough, banks could come up with additional ways to reduce their balance sheets. At its worst this literally could include calling loans simply because the loan-to-value ratios have risen too high”.
Source: Australian
Broker News
