Kiwis are treating their houses like cash machines – piling on the debt as they watch the value of their properties soar.
Reserve Bank figures show household debt – excluding investment property – has risen 23 per cent in the past five years to $163.4 billion.
Incomes have risen only 11.5 per cent.
Households are now carrying a debt level that is equivalent to 162 per cent of their annual disposable income – higher than the level reached before the global financial crisis.
Including property investment the total debt households owed as of April was $232.9 billion – according to the Reserve Bank.Satish Ranchhod – a senior economist at Westpac Bank – says the main driver has been low interest rates.
‘Continued low interest rates have sparked a sharp increase in household borrowing at a time when income growth has been very modest’.
And it’s housing loans where the growth has mainly come from.
Housing loan debt has risen 23.4 per cent to $132.83 billion.
Student loans were up 22.9 per cent to $14.84 billion and consumer loans are up 16.6 per cent to $15.7 billion.
..even conservative commentators/’experts’ are picking an up to 40% drop in auckland house prices coming up pretty soon…)