Strong property price growth over the past year or so "has been indicative of a resurfacing of risk within Australia's housing market," Standard & Poor's said in a commentary yesterday."At the heart of our observations are the forces driving the recent surge in property prices. Those forces include increasing investor participation in response to historically low interest rates," the ratings agency said."Australian banks also appear to be competing more aggressively on price (as measured by the difference between the standard variable rate and discount variable rate on housing loans), partly as a result of the relatively lower credit growth."S&P said this trend was "a likely indicator of a higher tolerance for risk.""In our opinion, the risk is that these conditions are translated by some households into a self-reinforcing feedback loop, pushing up demand on the back of increased leverage as a result of a cyclical low in interest rates - all against a backdrop of slower income growth and soft employment prospects."Those recently entering the housing market will face "mortgage repayment pressures … particularly those who are highly leveraged," S&P said."If mortgage-repayment pressures and/or a broader retrace in residential property prices" occurs this is "likely to be accompanied by or in response to higher unemployment and materially slower growth."Mortgage repayments for "some recent market entrants will continue to absorb a significant proportion of disposable income, leaving them vulnerable to increased mortgage repayment pressures as a result of either rising interest rates or lower income growth."A reversal of favourable credit trends would produce "negative rating pressures" S&P said.