Here’s an amazing statistic.
Even with the huge boom in Sydney house prices, leverage for Victorian households rose at more than twice the rate of debt to income in Victoria than it did in New South Wales.
That’s the finding of Westpac’s economic team with the release of their Coast to Coast report this morning. The report is a comprehensive comparison of a number of indicators of economic health between the states and across the nation.
Westpac said that when it comes to housing debt, the overall picture “shows some interesting detail”.
Leverage, as measured by debt to income ratios, is rising a little more quickly in Victoria but showing a more restrained lift elsewhere, including NSW (note that some of this reflects variations in income as well as debt).
The result is that with a more restrained approach to debt and prices rising faster than the rest of the country, New South Wales, likely driven by Sydney, is falling sharply in that state relative to the rest of the country.
Per capita net worth is rising strongly in NSW although savings rates suggest only a muted ‘wealth effect’ in the state date.
Sydney might have a housing bubble, but this data suggests it’s Victoria where the real housing risk lies.