Australia: Household debt hits 200%: UBS

A report last year showed that household debt had doubled in Australia since 2003, and according to AMP Capital’s Senior Economist Diana Mousina, younger generations are bearing the burden the most. In its Australian Banking Sector Update, UBS revealed the total household debt to disposable income ratio is currently sitting at 199.7%, which is equal to $2,466 billion ($2.46 trillion).

According to OECD data from 2016, this would put Australia 5th in the world when it comes to household debt, behind Switzerland (213%), Norway (231%), The Netherlands (270%) and Denmark (290%).

UBS reports subdued growth in household income will continue, with the debt/income ratio expected to peak at around 205% in June 2018 before slowing.

OECD defines household debt as “all liabilities that require payment of interest or principal by the household to a creditor in the future.”

“The majority of household debt is housing debt which is sitting at around 138% of income. The low-interest rate environment has encouraged households into the housing market and strong growth in Australian dwelling prices over recent years have added to this positive sentiment in the housing market,” Ms Mousina told Canstar.

“The exceptional growth in home prices across Australia (particularly in Sydney and Melbourne) have not been good news for first-home buyers. As a result, the share of first home buyers taking out loans fell to around a record low at around 13% in 2015 and remained at a soft level over 2016.


Published by: CanStar (18 February 2018)
Written by: William Jolly


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