Market Update

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Are Australian Household Debt Figures Too High?

affordabilityIn an article for the Property Update, Michael Yardney starts with talking about the opinion of commentators who feel that the Australian households are amassing a great deal of debt on their heads. This is also one of the reasons why they feel the property market might crash. Be that as it may, Yardney believes that the debt amassed is largely because the household incomes have improved a great deal, interest rates are incredibly low and people have been able to procure assets.

Current household debt

ANZ feels that the well-underpinned housing market and stable finances will see Australia coping rather well with the current household debt. There is a feeling that unless the economy is taken aback by multiple concerns including, but not limited to, sharp increase in cash rate, unemployment and drop in house prices, there is nothing to be stressed about the household debts.

You can read the original article here.

We are not averse to borrowing

In my opinion, we Australians, already aligned to the idea of buying our own homes (and not renting for eternity) have also developed a borrowing streak in us. We do not mind: it is as simple as that! A phenomenon which underpins this trend is the fact that we are using our SMSFs to borrow for residential properties. This was unheard of a decade earlier.

The leverage of borrowing

I think borrowing provides a great leveraging tool and there is nothing wrong with unless we are being duped into buying by some financial advisor who has only his own gain in his mind.