This study measures the effect of changes in net housing and financial wealth on household consumption. The link between consumption, income and net wealth is measured within a Dynamic Ordinary Least Squares and a Dynamic Generalised Least Squares framework for the period Q2:1988-Q1:2003. It is found a permanent one dollar rise in housing wealth leads to a six cent increase in consumption, three times the effect of a one dollar rise in net financial wealth. A policy experiment is conducted to quantify the effect of a fall in house prices on aggregate consumption. The house price fall is defined as the price movement required to realign house prices to a steady state valuation using a price-to-rental yield indicator. If the required house price realignment were to occur over one year, it is estimated that household consumption would fall by 4.1 to 10.6 per cent
