High wages and strong income growth is being credited for averting a housing collapse in Australia.
The Reserve Bank says the income growth seen under the Howard government helped to prevent us seeing a collapse such as experienced in the US.
Allowing for inflation, real wages in Australia grew by about 20 per cent between 2000 and 2008, while the earnings of workers in the US barely changed.
"Sitting on the other side of the world, it is easy to lose sight of just how far lending standards did decline in the US mortgage market," Dr Ellis said.
Although house prices kept rising through the past decade, the rate of growth was much slower after 2003 than the increase in household incomes.
Lending standards here were also higher than in the US. Australian banks did offer no deposit loans but they were less common and mortgage was not as high.