A Treasury research report has found concern about household debt levels is overdone.

Trends in household debt between 2002 and 2007 have raised some questions about whether borrowing is "excessive," researchers Katherine Henderson and Grant Scobie say in a Treasury working paper published on Christmas Eve.

"Household liabilities have grown rapidly over this period, largely as a result of borrowing for housing," they say. But assets have also increased because house prices have risen.

"A caveat to this is the relatively high proportion of housing in both assets and liabilities, leaving households more exposed to changes in the housing market than they would otherwise be with a more diversified portfolio," the paper says.

Net wealth, both per capita and as a share of household incomes, has increased to unprecedented levels.

The authors acknowledge that having a high proportion of housing in both the liabilities and assets of the household sector increased the exposure to price changes in the property market.

But the paper concludes that the proportion of families who could be considered at risk was low.

Non-partnered individuals not affected by student loans are in a good position.

"At least for couples there appears to have been an increase in vulnerable families between 2003-04 and 2008, although the absolute numbers are still quite small," the paper says.

The average debt servicing as a percentage of income was about 15%, with low income families being about five percentage points higher. Using a median figure, rather than average, the figure fell to 6.8% for couples and 3.6% for non-partnered individuals.

Typically, 5-10% of families have debt servicing costs greater than 30% of their gross income in 2003-04, a level regarded as one indicator of potential over indebtedness.

For non-partnered individuals, those deemed at risk are concentrated in the younger age groups but there is an artefact of accounting in this group. Their liabilities include student loans and they have no corresponding assets.

If it is assumed that lifetime earnings will at least equal the value of the student loan, the share of non-partnered individuals with negative wealth nearly halved, and the share at risk fell by more than 20%.