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.
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