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Housing Wealth Effects: Evidence from an Australian Panel

Author

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  • Callan Windsor
  • Jarkko P. Jääskelä
  • Richard Finlay

Abstract

type="main" xml:id="ecca12137-abs-0001"> We explore the positive relationship between house prices and household spending by following a panel of Australian households. No evidence for ‘traditional housing wealth effects' is found, with young homeowners exhibiting the largest wealth effects. Young renters also exhibit a positive consumption response to house prices, although less so than young homeowners. This suggests that increasing house prices raise spending via easing credit constraints and a common association between house prices and a third factor. Results from a cohort-level panel are similar to those using household-level data, suggesting that ‘pseudo-panels' may be used as a partial substitute for actual panels.

Suggested Citation

  • Callan Windsor & Jarkko P. Jääskelä & Richard Finlay, 2015. "Housing Wealth Effects: Evidence from an Australian Panel," Economica, London School of Economics and Political Science, vol. 82(327), pages 552-577, July.
    • Handle: RePEc:bla:econom:v:82:y:2015:i:327:p:552-577
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    File URL: http://hdl.handle.net/10.1111/ecca.2015.82.issue-327
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    Cited by:

    1. Best, Rohan & Burke, Paul J., 2022. "Effects of renting on household energy expenditure: Evidence from Australia," Energy Policy, Elsevier, vol. 166(C).
    2. Henrik Yde Andersen & Søren Leth-Petersen, 2021. "Housing Wealth or Collateral: How Home Value Shocks Drive Home Equity Extraction and Spending," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 403-440.
    3. Finlay Richard & Price Fiona, 2015. "Household saving in Australia," The B.E. Journal of Macroeconomics, De Gruyter, vol. 15(2), pages 677-704, July.
    4. Hori Masahiro & Niizeki Takeshi, 2019. "Housing Wealth Effects in Japan: Evidence Based on Household Micro Data," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(2), pages 1-28, April.
    5. Lu Zhang, 2019. "Do house prices matter for household consumption?," CPB Discussion Paper 396, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Valadkhani, Abbas & Costello, Greg & Ratti, Ronald, 2016. "House price cycles in Australia’s four largest capital cities," Economic Analysis and Policy, Elsevier, vol. 52(C), pages 11-22.
    7. Paul Frijters & Benno Torgler & Christian Gillitzer & Jin Cong Wang, 2016. "Housing Wealth Effects: Cross-sectional Evidence from New Vehicle Registrations," The Economic Record, The Economic Society of Australia, vol. 92, pages 30-51, June.
    8. Kim, Daehwan & Nilsen, Jeffrey, 2021. "Testing the presence of borrowing constraints from consumption responses to housing deposit changes," Journal of Asian Economics, Elsevier, vol. 74(C).
    9. Lu Zhang, 2019. "Do house prices matter for household consumption?," CPB Discussion Paper 396.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    10. David F Hendry & John N J Muellbauer, 2018. "The future of macroeconomics: macro theory and models at the Bank of England," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 34(1-2), pages 287-328.
    11. Mairead Roiste & Apostolos Fasianos & Robert Kirkby & Fang Yao, 2021. "Are Housing Wealth Effects Asymmetric in Booms and Busts?," The Journal of Real Estate Finance and Economics, Springer, vol. 62(4), pages 578-628, May.
    12. Chi-Wei Su & Xiao-Cui Yin & Ran Tao, 2018. "How do housing prices affect consumption in China? New evidence from a continuous wavelet analysis," PLOS ONE, Public Library of Science, vol. 13(9), pages 1-14, September.
    13. Atalay, Kadir & Edwards, Rebecca, 2022. "House prices, housing wealth and financial well-being," Journal of Urban Economics, Elsevier, vol. 129(C).
    14. Tim Atkin & Gianni La Cava, 2017. "The Transmission of Monetary Policy: How Does It Work?," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 01-08, September.
    15. Apostolos Fasianos & Reamonn Lydon, 2022. "Do households with debt cut back their consumption more? New evidence from the United Kingdom," Bulletin of Economic Research, Wiley Blackwell, vol. 74(3), pages 737-760, July.
    16. Muellbauer, John, 2018. "The Future of Macroeconomics," INET Oxford Working Papers 2018-10, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.

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