From SMH:
Australian household debt has reached a record high level as low wage growth fails to keep up with a resurgent property market amid signs the Reserve Bank will start next year with another interest rate cut to boost the economy.
As a weekly measure of consumer confidence dipped to a two-and-a-half year low on concerns about the economy, research by the NAB reveals household debt is now more than double annual income for the first time.
Household debt was 120 per cent of income at the turn of the century and reached 178 per cent in the wake of the global financial crisis when it stabilised as Australians sought to manage their finances. But since then it has started growing.
It has now reached 202 per cent with the most indebted households in Victoria, where the debt-to-income ratio has reached 212 per cent. It is followed by NSW households at 191 per cent while Queensland households are at 183 per cent.
NAB senior economist Kieran Davies said while total debt had only grown "modestly" to $2.5 trillion, wages were simply not keeping up with the extra imposts being carried by most households.
He said even though interest rates were at a record low, the debt servicing ratio of households was just short of the peak reached in 2008 when the official cash rate was 7.25 per cent. It is currently just 0.75 per cent.
The high debt left the country's households, particularly those in Victoria and NSW, at an increased risk in any downturn.
Australian household debt has reached a record high level as low wage growth fails to keep up with a resurgent property market amid signs the Reserve Bank will start next year with another interest rate cut to boost the economy.
As a weekly measure of consumer confidence dipped to a two-and-a-half year low on concerns about the economy, research by the NAB reveals household debt is now more than double annual income for the first time.
Household debt was 120 per cent of income at the turn of the century and reached 178 per cent in the wake of the global financial crisis when it stabilised as Australians sought to manage their finances. But since then it has started growing.
It has now reached 202 per cent with the most indebted households in Victoria, where the debt-to-income ratio has reached 212 per cent. It is followed by NSW households at 191 per cent while Queensland households are at 183 per cent.
NAB senior economist Kieran Davies said while total debt had only grown "modestly" to $2.5 trillion, wages were simply not keeping up with the extra imposts being carried by most households.
He said even though interest rates were at a record low, the debt servicing ratio of households was just short of the peak reached in 2008 when the official cash rate was 7.25 per cent. It is currently just 0.75 per cent.
The high debt left the country's households, particularly those in Victoria and NSW, at an increased risk in any downturn.
