Fitch Turns Up The Heat On Australia's Banks, Plans Housing Bubble Stress Test

australia, sydney, ap photo

Australian banks shares sold off today due to Fitch’s announcement that they would be conducting a stress test of the country’s banking system, according to the Sydney Morning Herald.

The stress tests will target the banking sector’s exposure to a potential housing bubble in the country.

Sydney property prices are up 41% since 2006 and approximately 60% of Australian bank loan books are secured by housing properties, according to the Sydney Morning Herald.

The simulation run in the stress test will focus on both defaults and a collapse in property prices.

Recently Commonwealth Bank tried to defend house prices and their defence was ripped apart for being untenable.

Check out why the housing bubble is real and Commonwealth Bank’s defence is all wrong >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.