Aussies hold a 'dangerously disproportionate' share of wealth in housing

by Mackenzie McCarty25 Feb 2013

The ratio of Australian mortgage debt to GDP has risen four-fold since 1990, following deregulation of the financial sector, while the share of loans channelled into housing has increased from 24% of total loans in 1990 to 59% currently.

“The rapid expansion of mortgage debt and housing values has been funded, to a large extent, by heavy offshore borrowings by Australia’s banks and is represented by a massive expansion in bank assets – mainly mortgages.”

Strongly rising commodity prices have also played a role in increasing housing values since 2004, says van Onselen, via their positive impact on incomes.

“The Australian Treasury estimates that 50% of Australia’s income growth over the 2000’s came from the one-off terms-of-trade boom, whereas McKinsey estimates that 90% of Australian income growth since 2005 came from the mining boom.”

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