Winds of change: RBA
September 17th 2008 06:07
Watch out property market - buyers are getting some sense. No more borrowing beyond capacity means many people won't be able to afford to buy homes at all. Good news for real estate investors, but bad news for people looking for a speculative profit. Does it mean prices will fall? Possible. But that depends on supply of housing to meet demand. States with high immigration will be OK - Queensland will survivie. This from AAP:
SYDNEY, Sept 17 AAP - Reserve Bank of Australia (RBA) governor Glenn Stevens says the era of households living beyond their means might be coming to an end.
Mr Stevens said household credit growth was much slower at present than it had been for some years and was running "roughly in line with income growth".
Speaking at the Australian Institute of Company Directors lunch in Sydney today, he said the turmoil on financial markets had caused households to take a more conservative approach to their levels of debt.
Mr Stevens said there was a chance gearing would resume once the situation on financial markets improved, "but there is also a good chance that households will for some time seek to contain and consolidate their debt, grow their consumption spending at a pace closer to income, and perhaps look to save more of their current income than in the recent past".
"It is possible that we are witnessing the early part of a new phase where the household spending and borrowing dynamic is different from the past decade and a half," Mr Stevens said.
Mr Stevens said household gross debt in Australia was equal to about 50 per cent of average annual household disposable income in the early 1990s.
The figure reached 160 per cent this year, Mr Stevens said.
SYDNEY, Sept 17 AAP - Reserve Bank of Australia (RBA) governor Glenn Stevens says the era of households living beyond their means might be coming to an end.
Speaking at the Australian Institute of Company Directors lunch in Sydney today, he said the turmoil on financial markets had caused households to take a more conservative approach to their levels of debt.
Mr Stevens said there was a chance gearing would resume once the situation on financial markets improved, "but there is also a good chance that households will for some time seek to contain and consolidate their debt, grow their consumption spending at a pace closer to income, and perhaps look to save more of their current income than in the recent past".
"It is possible that we are witnessing the early part of a new phase where the household spending and borrowing dynamic is different from the past decade and a half," Mr Stevens said.
Mr Stevens said household gross debt in Australia was equal to about 50 per cent of average annual household disposable income in the early 1990s.
The figure reached 160 per cent this year, Mr Stevens said.
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