The housing boom has had a positive impact for those Australians with a mortgage.
Most home owners now have fatter equity — the difference between the house value and the size of the home loan — giving them a better cushion against any potential downturn.
Moody’s Investors Service, in its latest analysis, says the loan to value ratios for Australian residential mortgages have fallen because of rising house prices, resulting in additional equity.
The ratings agency says rising prices have on average added 14 percentage points of equity but the size of cushions differs across states.
Strong housing price growth in Sydney and Melbourne have created the highest additional equity cushions in Australia. In NSW, the additional equity cushion is 21 percentage points and in Victoria it is 17%.
In Queensland the additional equity cushion is 9% and in South Australia it is 10%.
In Western Australia, where housing prices have come under pressure owing to the downturn in mining, the additional equity cushion turned negative, with the loan to valuation ratio one percentage point higher.
Over the last seven years, housing prices have increased by 45% on average across Australia.
In Sydney, prices jumped 74%, in Melbourne by 52%, 10% in Adelaide and 9% in Brisbane.
In Perth, housing prices have fallen 8% from their peak in December 2014, a fall of 1% over the seven years.