Property debt putting Australians in danger
The Australian Bureau of Statistics has warned that property debt could make Australians vulnerable to economic shocks.
New figures from the Australian Bureau of Statistics (ABS) show that household debt has nearly doubled since 2003-04. ABS chief economist, Bruce Hockman, said around 30% of households with debt could be considered over-indebted. Someone is classified as being over-indebted when their debt is equal to three-quarters or more of their assets or three or more years’ worth of their disposable household income.
The ABS said just under half of households with a mortgage were over-indebted, including 62% of households headed by a 25-34 year-old and 51% of households headed by a 35-44 year-old.
“Nearly half of our most wealthy households (47%) who have a property debt are over-indebted, holding an average property debt of $924,000. This makes them particularly susceptible if market conditions or household economic circumstances change,” Hockman said.
Darwin had the highest rate of over-indebtedness, with property owners owing an average of $581,000 per household in property debt and 69% of property owners considered over-indebted. Perth was close behind, with 55% of property owners over-indebted, owing an average of $574,000 in property debt.
Sydney and Melbourne had the highest number of over-indebted property owners. Over-indebted Sydney property owners owed an average of $765,000, while over-indebted Melbourne households owed an average of $496,000.