$994.8B debt, 21.3% gearing record low

Australia just crossed $994.8 billion in government securities on issue — but the bigger number is still housing at $12.77 trillion. - Government debt is 7.8% of Australian housing value - Housing added $315.9 billion in the March quarter alone - Housing debt to assets is 21.3%, a record low - Household debt to income is 177.7%, not 190% - Four of the last five years, household debt to income has fallen Then we compare two 99th percentile suburbs with almost identical yields and very different rental markets: Kewana, QLD at 4.58% yield and 0.80% vacancy, versus Newborough, VIC at 4.55% yield and 4.70% vacancy. The lesson is simple: vacancy first, owner-occupier share second, yield last. If you want the report on where our system is scoring highest right now, download it here: https://ripe.house/brief-degearing Disclaimer: General information only, not personal financial or legal advice.

Australia's government debt just passed $994 billion and the country lost its mind. Australian housing is worth $12.77 trillion, 12.8 times that. The panic hit the smallest balance sheet in the room while the household one quietly set a record. Two suburbs, same percentile, same yield, one moved the opposite way. Here is the number that ran the news cycle. $994.8 billion of Australian government securities on issue, per the debt manager's own live counter on Friday. Call it a trillion. It is the first time in the country's history. Now the number that did not run. The residential dwelling stock in this country is worth $12.77 trillion. That entire trillion dollar debt is 7.8% of Australian housing. In the March quarter alone, housing added $315.9 billion in value. Roughly a third of the debt everyone was panicking about in three months. And here is the one I want you to remember. Housing debt as a share of housing assets is 21.3%. That is a record low. Australian households now hold 78.7% equity in their own housing stock. Friday's analysis made the pivot everyone missed. It said correctly that our real debt problem is households, not government. Then it put a number on it, 190% of household income. So I went and pulled the source table, the Reserve Bank's Household Finances Series published in June. That number is wrong. The actual reading is 177.7%, not 190. It is overstated by more than 12 points and the direction matters more than the level. Household debt to income peaked at 187.7% back in June, 2018. We are 10 full points below the peak. Same story, harder evidence. Housing debt against housing assets peaked at 29.6% in 2012. Today it is 21.3, that is a 28% reduction in system gearing. Household equity and housing went from 70.4% to 78.7. And it is not one lucky quarter. Debt to income has fallen in four of the last five years. Debt to total assets is at 16%, the lowest reading of the period. This is a household sector that has spent five years quietly paying itself down while the headlines called it a bubble. So where is the actual risk? It is not the level of the debt, it is the price of it. On Friday, all four major banks cut their top term deposit rates inside 24 hours and 16 banks have cut at least one rate this month. Deposit rates have peaked. Meanwhile, long-term bond yields set fixed mortgage pricing and they are at levels last seen before the financial crisis. Your variable rate answers to the reserve bank, your fixed rate answers to the bond market, which brings me to the system. Suburb one is Kewana in Queensland. And before you picture the Sunshine Coast, this one is in Rockhampton. Postcode 4701, 99th percentile. Median 681,500, yield 4.58% and vacancy at 0.80%. Suburb two is Newborough, Victoria in the Latrobe Valley, also 99th percentile. Yield 4.55%, three hundredths of a point below the first suburb, effectively the same yield, but vacancy here is 4.70%. Same headline return and the opposite rental market underneath it, 5.9 times the vacancy for three hundredths of a point of yield. That is the whole lesson. In the first suburb, the yield is being defended by scarcity, nothing sits empty. In the second, the yield is compensation and you are being paid for reletting risk. Two identical numbers on a screening table, two completely different assets. Let's go street level on the tight one. This is Kewana, Rockhampton, four layers, sole price first, you know, you can see where the value concentrates. Then rental yield