My sense is that the household and banking sectors are in good financial shape for this stage in the business cycle; and that, though financial problems exist, they should not in themselves restrain the building economic recovery. The corporate sector presents a more mixed picture.
As had been the case in Sydney earlier in the decade, the recent increase in loan arrears in these states followed a sharp increase in housing loans and unusually strong rises in house prices between 2006 and 2008.