With financial liberalisation allowing more access to debt, and with the decline in interest rates making debt more affordable to the average household, this asset accumulation has been accompanied by a rise in debt, though the ratio of debt to assets has risen only moderately, from around 14-15 per cent in the late 1980s, to about 17-18 per cent now.
The structural decline in inflation and interest rates explains much of the rise in borrowing and buying by owner-occupiers. The effects of the gains in wealth on their behaviour are still working their way through the economy. But at present, our focus is on the role of investors in rental dwellings, which has become much more prominent in the past couple of years.