Our assessment is that despite the Australian economy having performed reasonably well over 2/4  BIS central bankers' speeches  recent years, there is still a fair degree of spare capacity in the economy. It is both possible and desirable to reduce that spare capacity.
A third factor linking housing wealth and consumption is the effect of realized capital gains, accrued either by selling one's house or by borrowing through a home equity loan. As Chairman Greenspan has noted, accumulated home equity is not itself a liquid asset. In addition, its value is somewhat uncertain, although general trends in real estate prices can be easily observed.