Bankruptcy Perth, Bankruptcy, How to File for Bankruptcy

Today in the news, former economics advisor John Adams revealed that Australia is too late to avoid an ‘economic apocalypse’ in spite of his repeated warnings to the political elites in Canberra. He proceeded to insist the Reserve Bank to raise interest rates to stop household debt getting further out of control.

This bubble is very easy to illustrate. Confidence! It’s the flawed perception that Australia’s last 20 years of continual economic growth will never experience any sort of correction is most worrying. Australia survived the GFC and a mining boom and bust. At the same time, Melbourne and Sydney house prices have not missed a beat or taken a backward step. Regrettably, the decision makers and powerful elite in Australia live in these two cities, and see Australia’s economic challenges through a completely different lens to the remainder of the country. It’s a two-speed economy spiralling uncontrollably.

I accept that this looming crisis isn’t just as straightforward as house prices in our two largest cities, but the median house prices in these cities are ever rising and contribute strongly to overall household debt. The boffins in Canberra realise there’s an enflamed house market but seem to be repugnant to take on any substantial steps to correct it for fear of a housing crash.

As far as the rest of the country goes, they have an entirely different set of economic prerogatives. For Western Australia and Queensland particularly, the mining bust has sent real estate prices tumbling downwards for years now.

Among one of the signals that demonstrate the household debt crisis we are beginning to see is the increase in the bankruptcy numbers across the entire country, particularly in the March 2017 quarter.

(source: https://www.afsa.gov.au/about-us/newsroom/media-release-regional-personal-insolvency-statistics-march-quarter-2017).

In the insolvency market, we are discovering the disastrous effects of house prices going backwards. Even though it is not the leading cause of personal bankruptcies, it clearly is a crucial factor.

House prices going backwards is just part of the problem; the other thing is owning a home in Australia allows lenders to put you in a very different space as far as borrowing capacity. Simply put, 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 varies considerably 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 very few people suggesting we slow down. If you wish to know more about the looming household debt crisis then give us a ring here at Bankruptcy Experts Perth on 1300 795 575 or visit our website for more information: Bankruptcy Perth