Australians are in debt at levels comparable only to two previous periods in the 1880s and 1920s -- which were followed by major depressions.

The deputy governor of the Reserve Bank of Australia, Ric Battelino, says data on credit going back 150 years shows "there is no domestic precedent for what has happened in the past 30 years."

Battelino told the Australian Broadcasting Corp. that during this period credit growth has outstripped GDP by 5 percent per year -- not only in Australia, but also in New Zealand, Spain, Ireland and Britain.

But he added that debt in Australia is mainly held by those who can afford it.

"While the build-up in household debt often has been portrayed by young couples trying to buy their first home, the more accurate description is that it has mainly been driven by older, higher income households who are trading up to higher quality or better-located houses, buying investment properties or taking out marginal loans to buy shares," Battelino said.

"These are all signs of rising affluence, driven by a very prolonged economic expansion."  // Copyright 2007 by United Press International



Publication date: 26 September 2007   

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