The decline in housing prices has also led to a fall in household wealth. Our standard estimate of the wealth effect is that a 10 per cent fall in housing prices leads to a 1½ per cent fall in household consumption over time.
[7] Given the decline in housing prices that has occurred, we estimate this accounted for the other half of the recent slowdown in consumption growth. As Graph 5 shows, the fall in housing prices has been accompanied by very low housing turnover.