Property booms don't make Australians spend up big like they used to H ouse prices have soared. So why aren't we spending more?
During the previous great property boom, which ran from 1996 to 2004, we splurged like there was no tomorrow. For much of that period, household spending rose faster than incomes and our debts zoomed higher.
A big factor in the shopping spree was the "wealth effect" experienced by those who owned housing. As property owners watched the value of their assets rise at double-digit rates, many spent some of the proceeds on things such as cars, TVs and whitegoods. 
Others felt comfortable to cut back on the amount they were saving because their house was rising in value.
In that period, Australian households were collectively extracting significant amounts of equity from their homes and spending it on consumption. A raft of economic studies has found higher housing wealth tends to boost household consumption.
Research published by the Reserve Bank in 2007 (in the wake of that boom) estimated that a rise in wealth of $100 leads to a rise in non-housing spending of $2 to $4 a year. Retailers loved the property price surge of the late 1990s and early 2000s, and the additional spending helped fuel robust rates of economic growth.
But this property boom is different. Even though home values in Sydney and Melbourne in the past few years have risen at a rate similar to the price surge a decade ago, we've been much more careful with our money.
During the past year or so household spending has been growing only a little higher than incomes. And that's despite interest rates dropping to a historic low. Once upon a time, interest rates at today's levels would have induced a debt-fuelled splurge in many households. But that's not happening.
So what's changed? One factor is the huge pile of debt families were left with after the previous boom.
When house prices started to take off back in 1996, the debt-to- income ratio for Australian households was about 80 per cent.
By the time prices peaked about 2004, that had ballooned to about 150 per cent, leaving Australian households with one of the biggest debt burdens, relative to income, in the world.
The rapid build-up in borrowings raised fears at the time about the stability of Australia's financial system. In the middle of last decade, the level of household indebtedness was deemed one of the main threats to future prosperity. The financial- sector disaster that some feared a decade ago has not eventuated.
But the borrowing binge is still having an economic impact because the debt carried by households has dampened our enthusiasm to spend, despite soaring house prices.
But debt might not be the only thing holding us back. Last week the deputy governor of the Reserve Bank, Philip Lowe, drew attention to another intriguing factor that helps explain our financial caution amid the boom. It may be that families are saving rather than spending because they want to help their children buy housing in future. Dr Lowe said there is evidence that younger generations are receiving increased assistance with household expenses from older generations, including the trend for young adults to stay in the family home longer before moving out.
Survey data shows the share of first-home buyers receiving loans from family and friends is already on the rise and that trend is likely to increase, especially in expensive property markets like Sydney, Melbourne and Canberra.
"This has both economic and social consequences," Dr Lowe told an audience in Perth. "Of course, if this type of intergenerational assistance does become more common, then fewer parents will be able to use the capital gains that they have benefited from to boost their own consumption," Dr Lowe said in a speech. "Instead, in effect, they will be using those capital gains to support the following generations with their higher housing costs."
The changing dynamics of housing in Australia means property booms can't boost the economy like they once did.