From a small northwestern observatory…

The books are still being written on the causes and effects of the recent recession, but one wide-spread agreement is that aggregate household debt, and particularly the ratio of debt to household income, has been a real problem for developed nations.  In the U.S., this ratio hit between 1.6 and 1.7 at the onset of the recession, and then fell to about 1.4 today.  In the U.K., the ratio topped out at just under 1.6 in late 2007, and is now down under 1.5.  Given the flat-lining of household incomes in the two countries, this constitutes a very significant pay-down in household debt.  Note that for most of the 1990’s, this ratio hovered between 1.0 and 1.1 in the U.S., and between 0.9 and 1.0 in the U.K.  It wasn’t until the easy money period of the late 1990’s that these ratios started soaring.  (In the U.S., this was a gradual rise, really starting about 1990.  In the U.K., the rise was more abrupt, beginning about 2001.)

Now we har that our neighbors to the north are trying to copy our bad behaviors.  In 1990, the typical Canadian household had a debt/income ratio of about 0.9.  This gradually rose to about 1.1 by the late 1990’s, then hovered there for a few years.  Over the past 10 years, the Canadian debt ratio has continuously grown, with no “peak” in the early days of the recession, and now sits at about 1.5.

courtesy RICS Global Real Estate Weekly