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The objective of the research presented in this report is to identify the nature and magnitude of the relationship between house prices, household debt and the labour market decisions of Australian households. It is well known that there is a positive relationship among house prices, household debt and labour supply. However, empirical estimates of the magnitudes of this relationship in Australia are scarce.

Therefore, this project analyses the link between house prices, mortgage debt, and labour supply using rich and contemporary data drawn from the Household, Income and Labour Dynamics in Australia (HILDA) survey for the period of 2001 to 2012 (waves 1–12).

The findings presented in this report have important implications for public policy and national wellbeing. Specifically, our findings relate to labour force productivity growth, the performance of the retirement income system and the stability of the macro-economy. Our results also highlight the importance of considering the links between, and the impact of policy on, labour supply, debt, and house prices separately for different demographic groups.

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