From our Chris today:
To APRA’s immense credit, it has managed to pull off a minor miracle: bursting the bubble during the boom.
Debelle has previously noted that there was no evidence of a wealth effect, or positive feedback loop into consumption, during the upswing when Melbourne and Sydney house prices surged 50 per cent and 75 per cent respectively over 2012 to 2017. On this basis, we should not expect a negative wealth effect simply because we are giving back a small share of that capital appreciation.
