Concerns Over Rapid Increase in Personal Bankruptcies Amid Australian Household Debt Pressure

The Australian Financial Security Authority (AFSA) has projected that personal bankruptcies will increase by more than 25% over the next 18 months as households deplete their savings and repay debts due to rising living costs.

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On the 23rd, The Australian daily cited an AFSA report stating that debtors with limited savings capacity amid economic hardship and tenants facing rental crises due to population growth and supply shortages in recent years are the most vulnerable to personal bankruptcy.

AFSA Chief Tim Beresford said, “Tenants are suffering more than any other group due to rapidly rising rents caused by supply shortages,” adding, “Households and businesses are facing the most severe mortgage stress and cash flow constraints since the Global Financial Crisis (GFC).” He expressed concern that “tenants are particularly vulnerable because they have fewer assets,” and warned, “If they lose their jobs or have reduced working hours, it will be very difficult for them to keep going.” In fact, tenants make up only 25% of all households but account for 93% of total personal bankruptcies.

According to the AFSA report, personal bankruptcies in Australia are expected to increase by 15% to 13,400 cases in the 2025 fiscal year (July 2024 to June 2025), and then rise by 12% to 14,950 cases in the following fiscal year.

Most personal bankruptcies occurred among debtors with debts under AUD 50,000 (approximately KRW 45 million), who make up 49% of all debtors, while only 25% of bankruptcies were among those with debts exceeding AUD 100,000 (approximately KRW 90 million).

Personal bankruptcies in Australia fell below 10,000 cases annually during the COVID-19 pandemic but have steadily increased again as savings declined following the government's cessation of pandemic support measures.

Regionally, New South Wales (NSW) and Victoria (VIC), led by Sydney and Melbourne respectively, recorded the highest numbers of personal bankruptcies, with 3,447 and 2,254 cases. The rate of personal bankruptcy was higher in metropolitan areas than in regional areas, with Sydney accounting for 17.3% of the total and Melbourne following at 13.6%.

Australian Financial Security Authority (AFSA) Chief Tim Beresford (Captured from Australian Government Transparency Portal)

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Chief Beresford stated, “Rising interest rates, increased enforcement by the Australian Taxation Office on unpaid taxes, and rising living costs are driving up personal bankruptcies,” but added, “Nonetheless, the still remarkably low unemployment rate means many people are managing to avoid bankruptcy and are coping well.”

He added, “The risk of personal bankruptcy remains high until inflation eases and housing supply increases,” advising, “Households facing financial difficulties should seek advice from financial counselors or trusted professionals.”

Jung Dong-chul, Hanho Times Reporter

※This article was written using content provided by Hanho Times.

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