Three mechanisms have been suggested to explain the strong correlation between house prices and consumption in the UK: wealth effects and collateral effects involve house prices driving consumption changes, but common causes may drive both house price and consumption growth simultaneously. Our contribution lies in our systematic use of a realistic structural lifecycle model of consumption and h...

Over the past five years, there has been a sustained rise in house prices in most major cities in Australia. Some part of this rise reflects the longer-term adjustment to a low inflation/low interest rate environment, which has increased the capacity of households to borrow – a development which cannot be repeated. However, this adjustment has also encouraged some new purchasers, particularly i...