10 / 09 / 2018 the evolution of household sector risks | speeches | rba speech the evolution of household sector risks michele bullock [ * ] assistant governor, financial system ai group albury – 10 september 2018 thank you for the invitation to speak at this ai group lunch. it is great to be back in regional australia. i am responsible for the area of the bank that focuses on financial stability. so my remarks today are going to cover one of the financial risks we have been focusing on over recent years – the high level of household debt in australia. household debt has been rising for a number of decades. how much of a concern is this? i am going to talk through the evolution of the current debt situation and how we see the current risks. given that i am in albury - wodonga, i will finish with a few comments on housing markets and debt in regional australia. household debt in australia has been rising relative to income for the past 30 years ( graph 1 ). this graph shows the total household debt - to - income for australia from the early 1990s until this year. over that time it has risen from around 70 per cent to around 190 per cent. there are three distinct periods. the first, from the early 1990s until the mid - 2000s, saw the debt - to - income ratio more than double to 160 per cent. then there was a period from around 2007 to 2013 when the ratio remained fairly steady at 160 per cent. finally, since 2013, the debt - to - income ratio has been rising again, reaching 190 per cent by 2018. https : / / www. rba. gov. au / speeches / 2018 / sp - ag - 2018 - 09 - 10. html 1 / 13 10 / 09 / 2018 the evolution of household sector risks | speeches | rba graph 1 australia has not been unique in seeing debt - to - income ratios rise. the median debt - to - income ratio for a range of developed economies has also risen over the past 30 years. but the australian debt - toincome ratio has risen more sharply. in fact, australia has moved from having a debt - to - income ratio lower than around two thirds of countries in the sample to being in a group of countries that have debt - to - income ratios in the top quarter of the sample. this suggests that there are both international and domestic factors at play when it comes to debt - to - income ratios. there are two key international factors that have tended to increase

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