Local news this morning, Australian first home buyers are most relaxed with the high debt burden to acquire their first home (
Link to genworth press release). Its painful irony that debt appetite of the home buyer is the sole reason for the huge capital outlay one needs to buy property in the first place.
The report goes on to say that 39% or Australian first home borrowers are using half their income to service their debt. The average age of the first-time home borrower has risen on average from 27 to 30, in those countries surveyed.
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| Australia vs US private debt to GDP ratio as % |
The above chart comes courtesy of Steve Keen of the University of Western Sydney, his blog
debtdeflation.com, is always a good read. Keen claims that the run up in house prices is simply an appetite for debt, and that the coming collapse in home prices is a symptom of an economy that can no longer service these debts.
This contrasts nicely with of debt appreciation shifting from the private sector to the public. Some theorize that the weak recovery since the GFC is solely attributed to a debt fueled government stimulus.
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