Australian household debt to income ratio nears 200pc

[Cerberus1]

Australia's household debt to income ratio has hit nearly 200 per cent, a level UBS analysts have called "extremely elevated" and "one of the highest in the world".

Total household liabilities have been revised upwards to $2.466 trillion, or 199.7 per cent of disposable income, by Australian Bureau of Statistics.

The revision was due to higher debt held within self-managed super funds, as the ABS is now incorporating new data from Australian Prudential Regulation Authority in its national accounts numbers.

UBS analysts expect households to become even more leveraged over the next one to two years, as income growth remains subdued.

"We expect total household debt to disposable income to peak around 205 per cent before the slow deleveraging process begins," analysts Jonathan Mott and Rachel Bentvelzen wrote.

As house prices continue to cool, particularly in Sydney, the UBS analysts see a number of brakes on the property market as "the housing bubble begins to deflate".

These include APRA's crackdown on interest only loans and the banks moving to improve lending standards amid scrutiny over "liar loans".

"Sentiment for investment into the housing market is waning, with the 'fear of missing out' euphoria fading quickly, especially in Sydney," the analysts wrote.

"Further, affordability remains a material issue."

[Goofy2018]

On 18/01/2018 at 21:37, Cerberus1 said:

 

"Further, affordability remains a material issue."

Pretty much...I'll never be able to afford a property on my own. It takes forever to save money on a single income and whenever I've had a bit of money saved I've had to use it for emergencies e.g. medical costs (even with private health insurance there are out of pocket costs), unpaid sick leave and redundancy. Buying a property is going to become harder and harder for lots of people.