Australian household debt triples in 25 years: study

Australians are holding three times more debt on average as they did 25 years ago, the Australian Broadcasting Corporation reported Wednesday.

According to a Curtin Economics Center report into household debt, in 1990 the average Australian household debt represented less then six months of annual income.

In 2015, it has tripled to 18 months of annual income.

The center's director Alan Duncan said there is a heightened risk of Australian households living beyond their means, particularly if saving disciplines aren't followed.

"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," Duncan said.

Duncan said the trend of increasing debt followed the introduction of mortgage packages in the 1980s and 1990s that allow homeowners to draw down on their mortgages when needed.

Duncan said the inequality in savings, approximately 200 times the amount between high earners and low earners, is quite significant even though the top 20 percent of savers only have four times the incomes of those that save the least.

Duncan said Australian property owners needed to diversify their assets to reduce their risk if the characteristics of Australia's property market changes.

"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," Duncan said. Endi