The number of Australians optimistic about the year ahead has dropped to a never-before-seen low as mortgage holders eye a combination of record-high household debt and the possibility of interest rate hikes in 2018.
According to a Roy Morgan survey, 31 per cent of people think 2018 will be “better” than 2017 – the lowest figure recorded since the survey began in 1980.
Younger Australians are more positive than older generations, in fact, a noticeable drop in optimism can be seen as Australians age. “If you were going to worry about a property price collapse, you wouldn’t be as worried about it if you were a younger Australian – they might actually see an opportunity. If you’re an older Australian with a lot of debt it might be more of a worry for you,” AMP Capital chief economist and head of investment strategy Shane Oliver told Domain.
Households are sitting on record high debt, above 190 per cent of income, which is why talk of interest rate hikes have been hitting confidence.
Meanwhile, confidence in the institutions to which Australians are so deeply indebted has scarcely been lower, with scandals and the threat of a royal commission a part of the landscape.
“This idea of the royal commission or commission of inquiry… putting aside the should we or shouldn’t we… that constant talk that there’s some sort of problem with the banks is probably affecting people as well.”