Wednesday, May 23, 2012

Heavy Gearing

According to the OECD, Australian households remain heavily geared with a high ratio of household debt to disposable income(183.7%), but this has declined from the pre-GFC level of 186.4%.  In 2000, this ratio was 124%.  The OECD average was 98%.  See story here.

Many Australians are prepared to borrow heavily to buy a residence, believing that "rent money is dead money".  But that is not always the situation.  Buying a house or apartment for the short term is often a bad decision.  And if you have to move with your job, as some Qantas engineers found out recently, owning a house can be a liability.

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