Posting that chart wont make up for your lack of factual evidence. The facts are that housing in capital cities around the world is expensive in comparison to Australia and rising, and Australian capital city housing is dirt cheap by comparison. You simply have no idea what you are talking about. Thats exactly why I have money and you dont. You do not understand finance, you are destined to remain on the bones of your arse.
You're an idiot whino. Stick to the cooking sherry mate. You can't even understand basic finance yourself. You'd be the sort that would buy bottles of expensive plonk with your credit card and big note yourself down at the local chinese BYO
IMF warns Australia on household debt vulnerabilityKey points:
- Australia's household debt is amongst the world's highest, around 100pc of GDP
- Average developed nation household debt is 63pc of GDP
- IMF concludes that higher household debt raises the risks of financial crises
Australia's high levels of household debt leave it potentially exposed to a global economic shock or a banking crisis, the International Monetary Fund has warned.
An IMF study into highly leveraged households and financial stability singles out Australia, where household debt has risen to 100 per cent of GDP, well ahead of other advanced economies where the ratio is much lower at 63 per cent.
"Higher growth in household debt is associated with a greater probability of banking crises," according to the IMF's latest Global Financial Stability Report.
"New empirical studies — as well as recent experience from the global financial crisis — have shown that increases in private sector credit, including household debt, may raise the likelihood of a financial crisis and could lead to lower growth."
The IMF warns the global level of household debt "remains high by historical standards" and "has kept growing in other advanced economies such as Australia and Canada".
While the report noted that debt can be positive in the long term, it cited research showing that high household indebtedness can cause "a significant debt overhang when a country faces extreme negative shocks".
In addition to Australia and Canada, the study observed that Cyprus, Denmark, Switzerland and the Netherlands are also exposed to significantly higher levels of household debt.
The Reserve Bank of Australia has repeatedly warned that rising levels of household debt and slowing wages growth mean some consumers could struggle to meet mortgage repayments when interest rates start rising.
As expected, the RBA board left the cash rate on hold at 1.5 per cent yesterday, while noting its ongoing concerns.
"Growth in housing debt has been outpacing the slow growth in household incomes for some time," RBA governor Dr Philip Lowe said.
Warning not to rely on continued home price gainsExpectations are growing that the RBA could begin raising the cash rate next year, with some economists tipping a move within six months.
While the IMF points to positive effects of higher debt of through higher growth and lower unemployment, it warns the benefits are typically reversed in three to five years.
The IMF also warned that some households increase debt and consumption based on the perceived wealth of their real estate investments.
"Households that base their expectations solely on extrapolations from past events, when house prices have been growing, may increase their borrowing during housing booms because they expect their home equity to continue growing," the research found.
Household debt rising post-GFCGlobally, the median household debt-to-GDP ratio among emerging market economies increased from 15 per cent in 2008 to 21 per cent in 2016.
Among advanced economies, the ratio increased from 52 per cent to 63 per cent over the same period.
The IMF said the negative medium-term consequences of higher household debt are more pronounced for advanced economies than for emerging market economies, where household debt is lower.
However, the IMF suggested that fallout from high household indebtedness could be softened if countries improve their financial regulation, reduced dependence on external financing, adopted flexible exchange rates and lowered income inequality.
The IMF's report is based on a study of more than 80 advanced and emerging economies, where debt levels are rising a decade after the global financial crisis.