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Thursday, 8 October 2015

Chart packs show higher debt ratios

Household debt revised higher

The monthly chart packs from the Reserve Bank of Australia (RBA) are always well worth a glance, and this month was no exception.

The three charts which stood out to me as most interesting this month were the three copied below.

Firstly, the RBA has restated household debt as a percentage of disposable income right the way across the entire history of the data series, although the interest paid figures remain unchanged.

The reasoning is partly explained here, with revisions relating to HECS debts and pre-existing liabilities to overseas banks of recent migrants.

Essentially the data disclosed in the chart packs is now better aligned to that found in the National Accounts.

In any case the first chart now shows the household debt ratio rising past "peak" household debt, and sharply too (though I'll take a bet that this chart additionally features a dotted line for offset accounts some time in the not-too-distant future).

Interestingly futures markets seem fairly convinced that the cash rate will be cut once again to 1.75 per cent by Q2 2016, but this chart might give one pause or thought...

Household Finances graph

For the record, here is what was diclosed earlier in the year.


Secondly, the housing prices data - now presented on a log scale - shows Sydney's median house price blasting to within a hair's breadth of $1 million, with the median price now having now nearly doubled since 2007.

The Brisbane housing market is now evidently in recovery mode while Melbourne has powered on, but Perth, Canberra and Adelaide are all looking rather muted.

Housing Prices graph

Thirdly, as I've warned recently here and numerous times elsewhere, South Australia's accelerating employment shock is now translating into sharply rising unemployment, and a good deal of the data for the state is intimating recession, even if the state final demand figures are not there just yet.

State Unemployment Rates graph

As always plenty more of interest to see here