The fearsome chart of Australians has the highest debt in the developed world – as experts warn it could get worse
- Credit rating agency Moody & # 39; s Analytics was worried about Australian debt levels
- A graph has been released that shows households' GDP to be among the highest in the world
- Moody & # 39; s fears that further interest rate falls will push up Australian debt levels
This is the scary graph that shows that Australians are paying some of the highest debt levels in the developed world.
Home mortgages, personal loans and credit card accounts together make up more than 120 percent of gross domestic product, a significant increase in just a decade.
US credit rating agency Moody & # 39; s Analytics fears that Australia's indebtedness may deteriorate if the Reserve Bank lowers interest rates to a new record.
This is the scary graph that shows that Australians pay the highest debt levels in the developed world. Home mortgages, personal loans and credit card accounts together make up more than 120 percent of gross domestic product, a significant increase in just a decade
& # 39; This could increase the leverage effect of households, further distinguishing Australia from its competitors & # 39 ;, it said in an economic note published Monday.
& # 39; This is an undesirable position to be in, especially given the questions about the sustainability of the potentially increasing debt burden. & # 39;
Australian household debt, as a percentage of the economy, is considerably higher than in the United States, where it is less than 80 percent, according to an analysis of Moody's data from the World Bank.
It also far exceeds that of other countries in the rich world, including the United Kingdom, Canada, New Zealand, France, Germany and Japan.
Only the debt ratio of households in Switzerland was higher in 2017.
In 2007, the household debt-to-GDP ratio was almost 110 percent.
The aftermath of the global financial crisis saw the debt ratio of households, as part of the economy, fall in Germany, Japan, the United Kingdom and the US.
In Australia, however, median house prices rose after the GFC, with a 68 percent increase in Sydney between 2012 and 2017 to more than $ 1 million.
The equivalent values of Melbourne increased by 54 percent at that time.
US credit rating agency Moody & # 39; s Analytics fears that Australia's indebtedness may deteriorate if the Reserve Bank lowers interest rates to a new record (stock image)
Since the peak in 2017, median house prices in Sydney have fallen by a record of 17 percent and by 15 percent in Melbourne.
Moody's economists expect real estate values to fall further in 2019 before recovering next year.
A STORY OF EIGHT CITIES
Sydney, 11.6% to $ 869,579
Melbourne, 12.6% to $ 708,523
Brisbane, with 2.3% to $ 531,047
Adelaide, an increase of 0.2% to $ 465,625
Perth, 8.7% to $ 459,823
Hobart, a 3.8% increase to $ 478,485
Darwin, 6.4% to $ 462,984
Canberra, an increase of 3.4% to $ 658,407
Source: average median house values of CoreLogic in the year until 31 May 2019
It expected median real estate prices throughout Sydney to dive by 9.6 percent this year before rising by 3.1 percent in 2020.
Ryde, in the north of the city, would plummet an even steeper 15.9 percent this year before rising by 1.1 percent in 2020.
House prices in Greater Melbourne are expected to be 10.8% lower than a recovery of 1.3% next year.
The Reserve Bank of Australia lowered interest rates this month to a new record low of 1.25 percent.
However, economists expect three more interest rate cuts in the coming year, so the cash rate would be just 0.5 percent or half a percentage point above zero.
Moody & # 39; s said that these interest rate cuts would stimulate the recovery of the housing market, making Australia's debt ratio even higher.
& # 39; The expectation of further credit cuts resulting from the RBA cash interest rate reduction will also breathe new life into the real estate market and strengthen our view that the national housing market will reach a low point in the third quarter of 2019 and will gradually improve thereafter, & # 39; he said .
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