Australian households are holding three times as much debt on average than they did 25 years ago, a report has found.

The Bankwest Curtin Economics Centre study concluded people were living beyond their means.

Average mortgage debt as a proportion of property values has almost tripled over the past 25 years, rising from 10 to 28 per cent since 1990.

In 1990, average household debt represented less than six months of annual income.

That has now tripled to 18 months of annual income.

The report stated that if superannuation savings earmarked for retirement were instead diverted to pay down mortgage balances when people approach the end of their working lives, then future financial security might be affected and a greater reliance would be placed on support from the state.

Centre director Alan Duncan said households should be careful not to overreach, given uncertainty around jobs and house prices.

"When you look at those sorts of debt-to-income ratios, with debt rising so much and particularly amongst households that are approaching retirement, that is really something we ought to guard against," Professor Duncan said.

"I think there is heightened risk, particularly if the disciplines for saving for a rainy day aren't followed as they have been up til the GFC, that you can find some households perhaps getting in too deep and living beyond their means."

He said the trend of increasing debt followed the introduction of mortgage packages in the 1980s and 90s, which allowed homeowners to draw down on their mortgages when needed, without having to sell their house.

"[They] can increase the level of debt for those who don't use such products with care," he said.

The gap between households that save and those that do not is also widening, the report found.

A report by Global bond fund giant PIMCO similarly found Australians were being "irrationally exuberant" and borrowing too much to invest in housing, exposing the economy to financial shocks.

In a detailed statistical study that compares Australian borrowers to those in other countries, PIMCO researchers found Australians' decisions to borrow was driven by falling interest rates and rising house prices, not economic fundamentals that reflect the health of the economy, such as employment.

Property offers 'safety of bricks and mortar'

Professor Duncan said while households with greater savings generally earned more, they also saved 200 times more than those which did not.

"The top 20 per cent of savers only have four times the incomes of those that save least," he said.

"Whereas in terms of savings they have 200 times that amount, so relative to incomes, the inequality in savings is really quite significant.

"That's concerning given the security savings give to households both now and in the future."

Professor Duncan said property owners also needed to diversify their assets to reduce their risk.

"There's a concentration of asset accumulation for all households on property, and that's given low interest rates and the rising value of properties, but that does expose one to risks if characteristics of the housing market change," he said.

"It is really important to encourage a diversified portfolio of savings across other asset and savings classes, and the fact we are not seeing that should signal some cause for concern.

"There does seem to be a focus on property but that focus is not something that is desirable in either the short or the long term."

Director of Hegney Property Group Gavin Hegney said Australians seem to be comfortable investing in property.

"People see property as being very safe and secure and also gives the benefit of living in it as well," he said.

"Other markets can be very volatile - they're in your face everyday, they're up one day, down the next day - and the more volatile they can be, the more it scares people.

"They just like the safety of bricks and mortar."

Mr Hegney said while the rising debt-to-income ratio is concerning, it can also be used for financial gain in WA's boom and bust economy.

"Debt is a dirty word in a downturn, because it really eats away your savings and can eat away your wage very quickly, especially if you don't have a corresponding lift in value," he said.

"But in a rising market, debt is a fantastic way to increase your wealth, especially if the assets are increasing at a greater price than what the debt cost you.

"As long as you can survive some of the short-term pain, it's very easy to live with the long-term gain."