With slower expected future income growth and increased concerns about future housing costs, the response to higher housing prices looks to be smaller than it was previously. And this smaller response is affecting overall spending in the economy. 11  See, for example, Dvornak and Kohler (2007).
12  Recent work at the RBA also suggest that higher housing wealth provides collateral for small-business borrowing and is associated with higher levels of business formation (see Connolly, La Cava and Read 2015). 13  See Windsor, Jääskelä and Finlay (2015).