We accept that the US over-dosed on debt and this was a major contributor to their housing and retail-economy bubble; both of which are collapsing. Residential housing is down 30% and commercial real-estate (landlords for retail tenants) are down 40-45%.
So if Australians' were even bigger bingers than the US, what does this portend for Australian housing?
Here's a snippet from the SMH article:
While millions of us max out our credit cards at January sales, three recent statistics together tell an alarming story. According to the Reserve Bank, for the first time Australians now owe more in household debt - on mortgages, credit cards and personal loans - than our entire economy earns in a year. That's $1.2 trillion of debt, or about $56,000 for every Australian man, woman and child.
Second, data commissioned from the Australian Bureau of Statistics by investment house CommSec showed where some of the debt was going. The bureau found that Australia can now lay claim to having the largest new homes in the world, even beating the United States. The average floor area of all new homes here is 214.5 square metres, an increase of nearly 50 per cent since 1985. When you consider that this is an average area, including flats and medium-density housing, then many of these new homes are truly gargantuan creations.
Finally, last week the ABS announced that retail spending for November grew at almost four times the trend rate, ahead of the Christmas peak. A fourth consecutive interest rate rise is suddenly possible when the Reserve Bank meets next month.
Despite the rosy economic undertones, the data collectively paint a worrying picture of a community of conspicuous consumers, eagerly buying lots of "stuff" on tick that we don't need or even use, stashing it away in McMansions that gorge energy to heat and cool, and giving the families that live there the carbon footprint of a small African country.
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