From David Uren today:
A research study by Commonwealth chief economist Michael Blythe, which draws on surveys of the bank’s customers, backs the Reserve Bank’s view that elevated housing debt is not an imminent threat to financial stability, with the largest debts held by those best able to afford them. But Blythe shows the build-up of debt is having a significant effect on consumer behaviour, which has responded to the growth in housing wealth very differently from the housing boom in the first half of the 2000s.
…The boom has greatly increased household wealth — ABS estimates show the value of the housing stock has risen by $2 trillion over the past 4½ years. Blythe says that traditionally, households spend about 4c out of every dollar of additional wealth, however this has not occurred during the boom. Instead, households have been making net equity injections into their housing, while consumer lending indicators show no appetite to tap into accumulated wealth.
