Australian's record debt is making us work longer, spend less

Australian’s have the world’s second-largest household debts. We know it, we worry about it, and there is increasing evidence it is changing our way of life. From the ABC’s Australia Talks National Survey,90% of the nearly 55,000 respondents rated household debt as a problem for the nation.

On an individual level, 37% are struggling to pay off their own debts, with almost half of millennials reporting that debt is a problem for them personally.

Housing debt has more than doubled in real terms since HILDA (Household, Income and Labour Dynamics in Australia) was launched in 2001. It is now averaging around about $350,000 for those who actually have mortgage debt, compared with around about $160,000 in debt in 2002, 2001.

“ On an individual level, 37% are struggling to pay off their own debts, with almost half of millennials reporting that debt is a problem for them personally.”

But not all of that housing debt has simply been used to buy homes - many people have been cashing in on the rising value of their properties over the past two decades.When people are increasing their debt from one year to the next, they’re essentially accessing the equity in their home. People are evidently using that increased equity to fund consumption. The Reserve Bank has been learning this the hard way, with three little interest rates cut this year, on top of personal income tax cuts.

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(ABC News - Michael Janda for The Money 2019)