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A Survey of Housing Equity Withdrawal and Injection in Australia

Author

Listed:
  • Carl Schwartz

    (Reserve Bank of Australia)

  • Tim Hampton

    (Reserve Bank of Australia)

  • Christine Lewis

    (Reserve Bank of Australia)

  • David Norman

    (Reserve Bank of Australia)

Abstract

Over the past decade or so, aggregate data suggest a trend increase in housing equity withdrawal in Australia, potentially stimulating household spending. However, there has been little disaggregated information on how equity is being withdrawn and injected, the characteristics of households altering housing equity, and how funds from withdrawn equity are being used. This paper uses a survey of 4 500 households commissioned by the Reserve Bank of Australia (RBA) to address these questions. The results suggest that, during 2004, the most common method of withdrawing equity was for a household to increase the level of debt secured against a property they already owned. In contrast, most of the value of equity withdrawn was associated with property transactions, with the typical property transaction resulting in a net equity withdrawal. Turnover in the property market is therefore likely to be an important driver of cycles in aggregate housing equity withdrawal. Bivariate and logit analysis suggests a significant life-cycle influence, with the bulk of equity withdrawal being undertaken by older households, while younger households typically inject, primarily through mortgage repayments or deposits for property purchase. Finally, the results suggest that the bulk of the value of withdrawn equity was used to increase non-housing assets, although a significant proportion of households used the funds for consumption expenditure.

Suggested Citation

  • Carl Schwartz & Tim Hampton & Christine Lewis & David Norman, 2006. "A Survey of Housing Equity Withdrawal and Injection in Australia," RBA Research Discussion Papers rdp2006-08, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp2006-08
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    File URL: https://www.rba.gov.au/publications/rdp/2006/pdf/rdp2006-08.pdf
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    References listed on IDEAS

    as
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    1. Carl Schwartz & Tim Hampton & Christine Lewis & David Norman, 2007. "A survey of housing equity withdrawal and injection in Australia," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Proceedings of the IFC Conference on "Measuring the financial position of the household sector", Basel, 30-31 August 2006 - Volume 1, volume 25, pages 115-131, Bank for International Settlements.
    2. Atalay, Kadir & Li, Ang & Whelan, Stephen, 2021. "Housing wealth, fertility intentions and fertility," Journal of Housing Economics, Elsevier, vol. 54(C).
    3. Alan Moran, 2007. "Land Regulations, Housing Prices and Productivity," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 14(1), pages 35-50.
    4. Lydon, Reamonn & O'Leary, Brídín, 2013. "Housing Equity Withdrawal Trends in Ireland," Quarterly Bulletin Articles, Central Bank of Ireland, pages 90-103, January.
    5. Paul Bloxham & Daisy McGregor & Ewan Rankin, 2010. "Housing Turnover and First-home Buyers," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 1-5, June.
    6. Meng, Xianming & Hoang, Nam T. & Siriwardana, Mahinda, 2013. "The determinants of Australian household debt: A macro level study," Journal of Asian Economics, Elsevier, vol. 29(C), pages 80-90.

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    More about this item

    Keywords

    housing equity withdrawal; housing turnover; household debt;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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