The risk profile of household debt in Australia
What will Australia’s household debt to GDP ratio look like in the coming years? Well by as early as next year Australia will overtake Denmark to have the highest indebted household ratio than any other nation relative to the size of the economy.
If the Australian economy starts to contract, the ratio will grow faster.
Can Australia’s household debt to GDP ratio decrease whilst maintaining high house prices?
Absolutely!…. But Australia will need a whole lot more than just some luck for that to happen in the immediate future. A bear minimum of 1.3% QOQ GDP growth and a a minimum of 1.2% QOQ household credit expansion. If credit expands at a slower pace…house prices in major cities start falling.
As I argue in my book ‘Print: The Central Bankers Bubble,’ society and mainstream economists ignoring this reality will be the greatest mistake they have ever made.