Asia is heading for Higher Risks in Household Debts

When we turn on to the current news via the television, radio, newspapers or internet, we are fed with the information that the global recession and slow economic growth are currently happening in Europe and the United States. However, many of us aren’t aware to the current situations in the Asia market. Even though many news reported that the economic growth in Asia is heading positive and healthy growth, especially from the strong players such as China, South Korea, Singapore, Malaysia, Thailand and Indonesia. However, these countries begin to heading towards “worrying” stages of high inflation and household debts. 

How do the Asians end up with higher household debts? Asians keep pushing themselves to purchase more than one property as they believe it is value for investment business, while the banks keep offering attractive mortgages without much regulations and investigation required. When the economy is slowing down and heading to recession, we will be seeing some property bubbles which is a similar situation in the United States during the crisis of subprime lending in 2008. We will expect more property owners are letting go their properties as they are unable to pay mortgages when there is an adjustment to the higher interest rates. Thus, the property prices will fall when there is an oversupply of the property in the market.  

Beside that, Asians develop more purchasing power to spend on expensive cars, luxury items, to enjoy on luxury lifestyle and traveling, which ended with more credit card debts, since many of them can’t afford to pay off from their salaries. Status and brand image on oneself is very important in their professional jobs at the moment, they are stepping into the society world in Asian countries. 

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