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Household debt in Australia has steadily risen in the last 30 years as more Australians aim to own their own homes and continue to rely on credit such as personal loans and credit cards.
According to data released by the Organisation for Economic Co-Operation and Development ("OECD") household debt to income in Australia has more than doubled between 1995 and 2015 going from 104% to 212%. Based on the average Australian wage of $78,832 this means that Australians are now spending $167,000 per year.
Internationally, since the 2008 global financial crisis, many developed countries actually saw deceases in household debt however Australian debt levels continued to increase with Australia placing 4th overall in household debt behind Denmark, the Netherlands and Norway.
With total personal debt now approximately $2 trillion this debt can be broken down into several categories:
The Australian Bureau of Statistics shows that mortgages make up 56.3% of personal debt in Australia.
This is debt associated with investments such as rental properties or shares and makes up 36.5% of household debt.
Personal loans currently make up 3.1% of Australian household debt and generally relate to motor vehicle purchases, debt consolidation, household goods purchases and holidays.
Student debt, particularly from HELP Loans make up 2.1% of Australian household debt. The National Centre for Social and Economic Modelling ("NATSEM") did note however that this figure reflects the time it takes in which for student debt to be paid.
Credit Card Debt
While historically reports have indicated that credit card debt is out of control in Australia, credit card debt currently represents only 1.9% of total household debt.
While the data released by OECD paints a dire national and global picture it should be noted that these figures don't necessarily impact us on an individual level as some households will generally have higher levels of debt and debt stress whereas others will have less.
It should also be noted that while our own personal debt may be among the highest when compared to GDP the majority of this debt, 92.8%, is from home loans and investments meaning that this debt is effectively a way in which to potentially build future wealth.