SYDNEY (BLOOMBERG) - S&P Global Ratings downgraded the credit scores of almost all of Australia's financial institutions as it warned the risks of a property market downturn are increasing, although expectations of government support saw the very largest banks spared.

Some 23 issuers had their ratings lowered including Bank of Queensland, Bendigo & Adelaide Bank and AMP Bank. The credit assessor exempted Australia & New Zealand Banking Group, Commonwealth Bank of Australia, Westpac Banking and National Australia Bank on the assumption that the government would step in to provide support if needed. It also opted not to lower the ratings for Macquarie Group and its banking unit.

"The risk of a sharp correction in property prices has increased," S&P said in a statement. "With residential home loans securing about two-thirds of banks' lending assets, the impact of such a scenario on financial institutions would be amplified by the Australian economy's external weaknesses, in particular its persistent current account deficits and high level of external debt."

Home prices in Sydney and Melbourne have surged in the wake of unprecedented interest-rate cuts by the Reserve Bank of Australia as the country navigates its way through the aftermath of a mining boom. Regulators have progressively tightened lending restrictions amid concerns about financial stability.

S&P last week maintained Australia's sovereign rating at AAA with a negative outlook. The rating agency warning then the nation's prized top ranking would only be secure once there was "meaningful moderation" in housing and credit growth.