subdued in perth. prices of apartments and detached dwellings there have declined further and are around 8 per cent below the peak. rents in perth have also declined by about the same amount. those changes are consistent with the weakening in general economic conditions in western australia. moreover, as the graph above shows, population growth in western australia has declined significantly since the peak of mining investment in 2012. and yet the full extent of the decline in population growth may not have been readily appreciated by buyers and builders of housing. that would be consistent with the fact that building approvals in western australia actually picked up noticeably from 2012 and did not peak until 2014, which was also about the same time that housing prices and rents reached a peak in perth. this meant that the housing supply was still 11 / 14 bis central bankers'speeches ramping up at the same time that population growth was declining. this is apparent in the following graph, which shows the growth in the number of people in each of the large states relative to the number of new dwellings completed at that time ( graph 10 ). the ‘ dashes ’ show the average number of people per household from the various censuses. 9 in western australia, this ratio has fallen sharply to about one additional person in the state per new dwelling completion. that ’ s well below the average number of inhabitants per dwelling. in other words, there are a lot of dwellings being completed relative to the needs of the slower growing populace. that is consistent with the sharp rise in vacancy rates in perth and the adjustment to rents and housing prices. it also suggests that dwelling construction and construction employment are likely to remain subdued for some time. that is having a knock - on effect to other industries linked to the property market. these linkages are one way in which the decline in the resource sector has been extended and amplified through to other parts of the economy. 10 before concluding, i ’ ll make a brief observation on the difference between the strong ( and rising ) population growth in victoria over recent years and the lower population growth in new south wales. victoria is now the beneficiary of net inward migration from each of the other states and a larger contribution from net overseas immigration, compared with its past and compared with new south wales currently. it strikes me that it ’ s possible that these contrasting outcomes across australia ’ s two most populated states owe in part to the relatively high cost of housing 12 / 14 bis central bankers'speeches and longer commute times in sydney ( and its surrounding areas

and consistent record of savings with a bank, and even then there was a tight limit on how much the bank would lend. many borrowers had to resort to “ cocktail ” loans, at higher cost, to meet their needs. graph 5 over the past 30 years, however, deregulation and financial innovation have greatly increased the household sector ’ s access to credit. this has been particularly so over the past 10 - 15 years as many banks focused their lending on the household sector after the credit losses on business loans in the early 1990s, and as financial innovations allowed non - bank lenders to enter the market for retail finance. the securitisation of loans, the development of numerous new loan products and the emergence of mortgage brokers were particularly important. economic circumstances have also played an important role, just as they have for business credit. the decline in inflation and the resulting fall in interest rates have reduced the cost of debt, while the strong ongoing performance of the economy has made households more comfortable in taking on debt. these and other factors contributing to the growth of household credit were examined in more detail in a couple of papers presented by some of my colleagues at the reserve bank ’ s annual economic conference last month. 2 in short, deregulation, innovation and lower inflation have simultaneously increased the supply, and reduced the cost, of finance to households, and not surprisingly households have responded by increasing their use of it. household credit outstanding rose from 20 per cent of gdp in the 1970s to 30 per cent by 1990, and to around 100 per cent today. household credit accounted for the bulk – 85 per cent – of the rise in overall credit to gdp over the past 15 years, and household credit now greatly exceeds business credit in terms of outstandings. while some of the rise in household credit has gone to financing consumption, most of it has been used to acquire assets. if we take the past 10 years, for example, households have borrowed in total an additional $ 770 billion over the period. of this, 90 per cent was used directly to buy assets, the main components being $ 420 billion for houses to live in, $ 240 billion for houses to rent and $ 40 billion for shares. see kent, c., c. ossolinski and l. willard ( 2007 ), “ household indebtedness – sustainability and risk ”, reserve bank of australia conference paper, 20 - 21 august 2007 ; ryan, c. and c. thompson ( 2007 ), “ risk and