Australians saddled with extremely high housing debts that could wreck economy
SYDNEY Australians are racking up extreme levels of debt to buy homes that are among the world's most expensive, a ticking time bomb that could wreck the economy if it is hit by a sudden shock, experts warn.
While the country is one of the best-performing developed global economies and is on course for a record 26 years without a recession, soaring property prices have also made it a world-beater in household debt.
The nation has a household debt-to-GDP ratio of 123 per cent, largely housing debt - second only to Switzerland, according to the Bank of International Settlements.
Those levels exceed the US, Spain and Ireland before their property market crashes, global ratings agency Moody's said in a report this month, warning Australians also held limited liquid assets.
"Australians have borrowed up a storm and housing prices in this nation are now dangerously dumb," prominent Australian economist Chris Richardson said this month.
"Compared with the global financial crisis, our vulnerabilities are higher, our defences are weaker."
Sydney's median house price is A$1.1 million (S$1.14m) and nationally prices have soared 250 per cent in real terms since the mid-1990s, reports said.- AFP