together with that – housing prices rise even relative to the higher incomes that often go along with big - city living. so urban concentration affects macro - level variables, like the ratio of housing prices to household incomes, as well as individual - level outcomes, such as people ’ s lifetime housing experiences. the structure of the mortgage market matters, for example whether fixed or variable - rate mortgages predominate. these features are in turn affected by a range of tax and other institutional factors. an example of a feature quite specific to australia is the popularity of linked offset accounts. these change the interpretation of debt data that do not adjust for balances in these accounts. they also change assessments of the resilience of the household sector to various kinds of shocks. 1 / 12 bis central bankers'speeches taken together, these factors suggest that we can ’ t assume a single value of any particular macro - level ratio exists that is ‘ right ’ for all countries or for all time. it depends. we can ’ t assume that a particular level of debt is always and everywhere sustainable. it depends on who has the debt and what kind of credit risk they pose. we can ’ t assume that a particular level of prices is ‘ correct ’ or ‘ sustainable ’ in all circumstances. what we can do is get some sense of the relativities between countries that you might expect, given those institutional and other differences. for example, we can reasonably expect that countries where much of the population lives in smaller, cheaper cities will have lower national aggregate ratios of housing prices to incomes than other countries. that might partly explain why the price - to - income ratio for the united states is relatively low ( graph 1 ). by contrast, australia is somewhere around the middle of the pack of mid - sized countries on this metric. similar comparisons of household debt - to - income ratios across countries also put australia in the middle of the pack. 1 the united states is lower, consistent with the lower average price - toincome ratios there. several small european countries, such as sweden and the netherlands, have much higher ratios than australia does. i would not expect or want australia ’ s ratio to be as high as it is in those countries. their institutions are different. in particular, a wider range of debt is tax - deductible in those countries, so households have less incentive to pay debt down. 2 / 12 bis central bankers'speeches distributions matter : the micro - level dimension the concept of inequality

least two – the productivity commission ’ s 2003 inquiry and the house of representatives standing committee on economics inquiry in 2015 – were specifically on home ownership. at a national level, australia actually has a home ownership rate that is neither unusually high nor unusually low. 2 many of the countries that have higher rates seem to manage it by having very high proportions of young adults living with their parents, even into their thirties, rather than renting. but the outcomes do vary across households. we can see this in several independently collected data sets, but for today i ’ m going to rely mainly on the hilda survey. unsurprisingly, higher - income households are more likely to own their own home, whether with a mortgage or outright ( graph 2 ). the highest - income group are not only more likely to live in their own home ; the wealth represented by their own home, net of debt, is also higher than for lowerincome and middle - income households. 3 / 12 bis central bankers'speeches more important than income, though, is life stage. not many teenagers or young adults are heads of households ; those that are, are not that likely to own their own home. 3 over time, people do start purchasing their home. home ownership rates rise rapidly with age, reaching 80 per cent for households headed by someone aged 55 or more ( graph 3 ). housing wealth has the same pattern, largely because the older you are, the longer you have had to pay your mortgage down. 4 / 12 bis central bankers'speeches because higher - income households are more likely to be owner - occupiers, they are also more likely to have mortgage debt ( graph 4 ). this is why we say that most of the mortgage debt in australia has been borrowed by those most able to service it. that said, the lower - income households that do have debt, tend to have quite a lot of debt relative to their incomes. sometimes this is because they have temporarily low incomes, but overall it does speak to the need to be aware of pockets of potential stress within a more benign overall picture. 5 / 12 bis central bankers'speeches participation in the housing market need not be about owning your own home. many people rent ; someone else has to own those dwellings as well. in australia, most private rental properties are owned by other households. in other words, there are not many companies operating as residential landlords. a good indication of who owns rental properties comes from looking at people who