Australian property investors 'should consider worst-case scenarios'

All investors looking to buy Australian property should consider every financial scenario they could possibly face, an expert has advised.

James Thomson, editor of SmartCompany, has suggested that people take these into account when making property decisions no matter how unlikely the circumstances they are contemplating.

He said that investors should actually consider how their equity position would be affected if house prices were to crash by anywhere up to ten per cent, or whether mortgage rates were to be hiked by as much as five per cent.

Mr Thomson said: "A bit of personal stress testing will go a long way."

He asserted: "Economy-wide comparisons of debt to equity ratios, income to house prices, and metropolitan and regional prices are important to watch, particularly where they may impact economic growth."

Earlier this month, BuyAssociation editor Paul Collins warned foreign property buyers to get advice about moving overseas in order to obtain homes in the most lucrative areas.

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