Unlike investment for business purposes, which is presumably undertaken in expectation of a cash return, the main return from a higher quality dwelling stock for owner-occupiers will be an enhanced flow of dwelling services, which is not received in cash.
These households were confident that their future income would be sufficient to afford that higher consumption of dwelling services, paid for in the form of higher debt servicing. We can’t know as yet whether or not that judgement was correct. Is the rise in the current account deficit associated with this, in itself, a problem?