Household Indebtedness and Housing Prices in Australia

Kadir Atalay, Garry Barrett, Rebecca Edwards and Chaoran Yu

No 2016-18, Working Papers from University of Sydney, School of Economics

Abstract: We analyse the effect of housing wealth on household indebtedness for the period 2002 to 2014 in Australia. Overall we find that approximately one quarter of the growth in household debt during this period can be explained by rising house prices. This rise is mostly driven by the wealth effect associated with rising house prices, and a collateral effect which is present for households that are collateral and liquidity constrained. We uncover a weaker wealth effect for households that have faced negative shocks to income or employment which indicates precautionary behaviour..

Keywords: Housing Wealth; Household Debt; Credit Constrain (search for similar items in EconPapers)
Date: 2016-12
New Economics Papers: this item is included in nep-ure
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