Australia's $5.5 trillion real estate market has several protections against a housing price crisis like the US sub-prime mortgage crash which ravaged the economy during the GFC, says Deloitte.
According to Deloitte's 2015 mortgage report, Australian house prices are safeguarded by low risk-weighted home loans, regulatory bodies, and culture of paying down mortgages beyond minimum requires.
Deloitte risk and regulatory financial services leader, Kevin Nixon, said Australia had relatively light risk in housing debt, as the ratio of an average mortgage weighed against the value of a home was "quite low".
Asked whether Australia could weather a 30 per cent house price fall, such as when average US house prices dropped 20 per cent in two years during the GFC, Mr Nixon said: "It would hurt, but for a lot of people it would just eat up their equity on paper, and as long as they don’t lose their jobs, they can continue to service their loans."
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Mr Nixon said steady house price appreciation, the ageing of mortgages in a portfolio, and the propensity for Australian borrowers to pay down their mortgages over and above required monthly payments would lessen risks to the housing system.
With Australia's strong growth in house prices, Mr Nixon said, the longer a homeowner holds an outstanding mortgage, the less leveraged the original loan as a proportion of the home's value will become.
For example, a home loan of $300,000 will be leveraged against an asset -- the house -- the value of which increases faster than interest accumulates on the loan, in the process reducing the risk of the original mortgage.
But Mr Nixon said this prospect also raised the issue of consumers refinancing their mortgages against current, inflated home values.
"Where one would become concerned ... is where we see people en-masse refinancing their mortgages against their increasing housing value." Mr Nixon said. "The system-wide buffer disappears."
The Australian Bureau of Statistics showed nominal house prices grew at 9 per cent in the year to September. But that figure was nearly 15 per cent in Sydney over the same period. Monthly data since then suggests the trend had continued.
Low interest rates were providing the potential for rapid house price gains to continue, the Deloitte report said, with the Reserve Bank of Australia recently cutting the official cash rate to its lowest ever level of 2.25 per cent.
But Deloitte said even with house prices surging, measures of mortgage stress -- the ability of households to pay down housing debt -- remained below the average over the last decade.
"This suggests that households can afford to borrow more, although there is vulnerability if interest rates increase," Deloitte said.
Macquarie executive director Frank Ganis said the Australian real estate market was safeguarded by local consumers paying down their mortgages at a quicker rate.
"Approximately two-thirds of real estate in Australia is owner occupied, and of those two-thirds, half have no mortgage," Mr Ganis said.
While the RBA has said it was concerned by rapidly rising house prices, Deloitte said it supported the central bank's stance against the use of tighter regulation by way of macroprudential tools.
"Systemic risk can be very difficult to predict, define and contain narrowly," Deloitte said. "To address risks in a formulaic manner is problematic and may in fact be counterproductive."
Deloitte said Australia's housing market was in safe hands with its two stabilisation bodies -- the RBA who regulates through interest rates, and the government regulating through policies addressing unemployment.