Household debt on average has grown threefold in 25 years for Australians, new data from the Curtin Economics Centre has revealed.
According to the study, 1990 saw the average Australian household debt at less than six months of annual income. This year, the average has tripled to 18 months of annual income.
"When you look at those sorts of debt-to-income ratios, with debt rising so much and particularly amongst households that are approaching retirement, that is really something we ought to guard against," the centre's director Alan Duncan was quoted as saying by ABC News.
He warned that there is a high risk that Australians may live beyond their means if saving disciplines aren’t followed.
Duncan also said the trend of increasing debt among households followed the introduction of mortgage packages in the 1980s and 1990s that allow homeowners to borrow on their mortgages when needed.
To cut the risks from Australia’s property market changes, Duncan suggests that homeowners must diversify their assets.
"It is really important to encourage a diversified portfolio of savings across other asset and savings classes, and the fact we are not seeing that should signal some cause for concern," he said.