In the '80s the average Australian household had debts totaling around 40% of their disposal income, that is income after tax. In December 1986 the ratio was 44.1% and just twenty years later in December 2006 the ratio accelerated to over 150%, an increase of 340%. Today it is even higher thanks to the taxpayer funded boost to the FHOG. It's no wonder a 0.25% increase in interest rates feel a lot more these days.
Australia has the highest household debt to disposable income ratio in the world;
And now that we've finally reach debt saturation tipping point, with the most marginal borrowers (FHBs) lured into the housing market, housing finance is falling off a cliff. We can expect house prices to follow.
