Bankruptcy Experts Gold Coast
Bankruptcy Experts Gold Coast
Today in the news, former economics advisor John Adams said that Australia is too late to avoid an ‘economic apocalypse’ despite his recurrent warnings to the political elites in Canberra. He continued to implore the Reserve Bank to raise interest rates to stop household debt getting further out of hand.
This bubble is very simple to describe. Confidence! It’s the misconstrued perception that Australia’s last twenty years of continual economic growth will never experience any type of correction is most distressing. Australia survived the GFC and a mining boom and bust. At the same time, Sydney and Melbourne house prices have not skipped a beat or taken a backward step. Regrettably, the decision makers and powerful elite in this country reside in these two cities, and see Australia’s economic challenges through a completely different lens to the rest of the country. It’s a two-speed economy spiralling uncontrollably.
I concede that this emerging crisis isn’t just as simple as house prices in our two largest cities, but the average house prices in these cities are ever rising and contribute considerably to total household debt. The authorities in Canberra realise there’s an inflamed house market but appear to be repugnant to take on any substantial efforts to correct it for fear of a housing crash.
As far as the rest of the country goes, they have a totally different set of economic priorities. For Western Australia and Queensland particularly, the mining bust has sent house prices tumbling downwards for years now.
Just one of the signals that confirm the household debt crisis we are beginning to see is the increase in the bankruptcy numbers throughout the entire country, particularly in the 2017 March quarter.
In the insolvency sector, our experts are discovering the destructive effects of house prices going backwards. Even though it is not the leading cause of personal bankruptcies, it definitely is a critical factor.
House prices going backwards is just part of the dilemma; the other thing is owning a home in this country enables lenders to put you in a very different space as far as borrowing capacity. Put simply, you can borrow far more if you are a home owner than if you are not a home owner. I bankrupt people everyday and the extent of debt differs substantially from the non-home owner to the home owner. Lending is founded on algorithms and risk, so I suppose if you own a home you’re more likely to have consistent income and less likely to wind up bankrupt, so subsequently you can borrow more. If you own a home in Sydney and Melbourne, you’re a safer risk than if you own a home in Mackay, simply due to the fact that in one area the median house prices are booming and the other is going backwards, as it’s been doing so for years.
In conclusion, it seems we are running into a wall at full speed, and there are not too many people suggesting we slow down. If you wish to know more about the looming household debt crisis then get in touch with us here at Bankruptcy Experts Gold Coast on 1300 879 867 or visit our website to find out more: www.bankruptcyexpertsgoldcoast.com.au