Borrowing, Real Incomes, Rents and Building Costs: Four of Martin North's Claims Tested

Borrowing, Real Incomes, Rents and Building Costs: Four of Martin North’s Claims Tested

Scope and Purpose

In a September 2026 interview, Martin North, principal of Digital Finance Analytics, set out why he believes interest rates and lending policy drive the Australian housing market and what his household surveys show about financial pressure. His account is carried in the companion Economists & Analysts output, North: Australia’s Housing Market as a Three-Body Problem. Most of it rests on his own survey and model. Four of his claims, though, rest on published series: that households borrow far more than they did in 2000; that real incomes are lower than a decade ago; that official rent statistics miss increases on existing leases; and that new homes are becoming dearer to build while existing homes fall in price. This output puts those four against the RBA and ABS series and Australian Property Network’s (APN’s) certified readings. The short answer is that three hold, each with a qualification, and one holds for private rent indices but not for the official measure.

Proposition One: Households Borrow Far More Than in 2000

The Reserve Bank’s measure of housing debt relative to household disposable income was 67.6% in the March quarter of 2000 and 134.6% in the March quarter of 2026. Households now owe about twice as much for housing, relative to their income, as they did in 2000, and the claim holds. The timing qualifies it. Most of the increase came between 2000 and 2010, when the ratio rose from 67.6% to 117.8%. Since 2017 its March-quarter readings have stayed within a narrow band between 132% and 138%. The borrowing that North describes built up over two decades; it is not still accelerating.

His more specific figures, that a buyer around 2000 could borrow about three times one income and that lending now runs to six to eight times two incomes, describe the size of new loans relative to income at the point of borrowing. The ratio above describes the whole stock of housing debt, so it does not test those multiples directly, and APN records them as NIL RETURN. Credit Velocity (21270) reads +0.3344σ for the March quarter, ranked 69.6 against 24 quarters: the pace of credit is above its average and within its usual range.

Proposition Two: Real Incomes Are Lower Than a Decade Ago

Measured by wages, the claim holds. Between the June quarters of 2016 and 2026, the Wage Price Index rose 30.5% and the Consumer Price Index rose 35.6%, so an hour’s pay buys about 3.8% less than it did ten years ago. APN’s earlier test of real wages since COVID shows how that happened: most of the loss came between 2021 and mid-2023, when inflation ran well ahead of wages. The claim holds for real wages. North speaks of incomes, which also include working hours, transfers and investment income, and this output does not test that broader measure.

Proposition Three: Official Rent Statistics Miss Rises on Existing Leases

This claim holds for some rent measures but not for the official one. Privately published rent indices are built from advertised rents, and so they record only the rents set on new leases. The ABS Consumer Price Index measure of rents is different: the ABS describes it as measuring price changes “for the stock of all rentals”, existing tenancies included (ABS, April 2023). Increases on existing leases are therefore captured in the official rent measure; the omission North describes applies to advertised-rent indices.

The two kinds of measure diverge as that difference would suggest. In the year to June 2026, the CPI rents measure rose 3.6%. The national median rent on new bonds lodged across the five reporting states, which Rental Market Analysis (21190) uses, rose 5.6%, from $658.00 to $695.15 a week. New leases are rising faster than the stock of all rents, which is what happens when rents set on new leases pull ahead and existing leases catch up over time. The two measures also differ in coverage, the first spanning the capital cities and the second five states, so the comparison is indicative. Rental Market Analysis (21190) reads +1.4816σ for the June quarter, on a 12-quarter baseline, so its position is indicative.

Proposition Four: Building Costs Rising While Prices Fall

On the latest quarter, the claim holds. The CPI measure of what owner-occupiers pay for a new dwelling rose 2.0% in the June quarter of 2026 and 5.8% over the year. The ABS mean price of all residential dwellings fell 0.7% in the same quarter, to $1,100,400, its first fall in the four quarters shown. For the first time in this period, new-build costs rose while the price of the existing stock fell. Over the year as a whole, the mean dwelling price is still 6.8% higher, so the divergence is recent.

Construction Costs & Supply Chain (21260) reads +1.0353σ for the June quarter, the highest of its 20 full-coverage quarters since the recorded break in its insolvency input. Builders’ own input costs also rose: the ABS producer price index of inputs to house construction increased 2.1% in the June quarter and 3.8% over the year. Rising build costs while the value of the existing stock falls is consistent with North’s point about pressure on the construction sector, and with the insolvency record set out in APN’s earlier construction outputs.

APN Analytical Synthesis

Of North’s four claims on the published record, three hold, each with a qualification. Households owe about twice as much for housing relative to income as in 2000, but the ratio has been broadly flat since 2017. Real wages are lower than a decade ago, though that measures pay rather than all income. New-build costs are rising while dwelling prices have begun to fall, a divergence that appears in the latest quarter only. The fourth holds only in part: advertised-rent indices miss increases on existing leases, but the ABS measure does not. The published record supports his central premise, that households carry far more housing debt than a generation ago on wages that have not kept pace with consumer prices, more firmly than it supports his account of how the official statistics are built.

His survey measures of household stress sit outside what this output can test, and are presented in the companion output as his own estimates. The published arrears and hardship data over the coming quarters will show how much of the pressure he describes reaches missed payments. This synthesis speaks only to the structural conditions the cited data can independently support; it does not constitute a view on future dwelling prices, rents, interest rates or household finances, and no such view is expressed or implied.

Disclaimer

The analysis and information contained in this publication are for general informational and strategic purposes only and do not constitute financial, investment, legal, or any other form of professional advice. Australian Property Network is not a licensed financial advisor. Property values and market conditions can go up or down. Before making any property or investment decisions, you must conduct your own thorough research and seek independent professional advice tailored to your specific circumstances.