Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open.

What implications does having the highest household debt to disposable income ratio have on Australia?
I'd like to see a credible source for "the highest", but it's certainly fairly high. Household debt could be broadly categorized as debt for housing and debt for consumption. Housing prices seem very high compared to equivalent rental income.  This is generating a great deal of debt.  Keynes(?) said that "if something cannot go on forever, it will stop."  Just when it will stop, and whether it will stop suddenly or gradually is a matter of great interest.  Obviously there are huge vested interests, including the large fraction of the population who already own property and do not wish to see it fall.  Nobody really knows; my guess would be on a very-long-term plateau in nominal prices and decline in real prices. The Australian stock market is unlike the US: since it's a small country, a lot of the big companies are export-driven, either by directly exporting physical goods (miners, agriculture) or by FDI (property trusts, banks).  So a local recession will hurt the stock market, but not across the board.  A decline in the value of the Australian dollar would be very good news for some of these companies. Debt for consumption I think is the smaller fraction.  Arguably it's driven by a wealth effect of Australia having had a reasonably good crisis with low unemployment and increasing international purchasing power.  If this tops out, you'd expect to see reduced earnings for consumer discretionary companies.