Analysis Of Residential Housing Markets

First of all, from 2008 to 2015, property prices of all capital cities in Australia have increased rapidly. People have had obsession with buying houses. At the same time,

Meanwhile, yearly house price inflation rates in the top 20 cities are running in line with the national trend. The cities with the highest rates of increase are Seattle (+12%), Portland (+10%) and Dallas (+9%). Lower tier property prices appear to be more volatile than their high end counterparts in both Seattle and Portland. Meanwhile, the three cities with the lowest rates of house price inflation are New York (+3%), Washington (+4%) and Cleveland (+5%). Furthermore, rising house prices appear to be having an adverse impact on affordability. According to the National Association of Realtors, rising prices are offsetting higher disposable incomes and stable mortgage rates, and affordability has consequently been declining since January 2015. Partly driving the increase in prices is a lack of available supply of existing single family homes for sale. The number of months’ of unsold inventory was just below 4 in March and availability has been gradually falling since 2014. Additionally, there is a relatively tight supply situation for new single family homes for sale, which is also helping to support prices.

Housing affordability can be defined as the ability to access appropriate housing at tenure or price which is not a significant burden upon household income. (1, 2) Australia has seen a significant decline in housing affordability; average house prices have increased by 147% between 2001 and 2011. This was not matched by increases in income. (1) This decline can be attributed to economic growth, population growth, more accessible finance and incentives for owners and investors. These factors create an incentive to buy and store wealth in housing, resulting in overinvestment and house price inflation. (2, 3) Consequently, this results in depletion of affordable housing for low-income households and increases pressure on social housing stocks. (1, 4) Supply and demand has a significant effect on housing affordability. (1)

Owner-occupancy in the US peaked at 69.4% in 2004 Q2 and it has subsequently declined to 63.1% in 2016 Q2. There has, therefore, been a significant rise in the size of the US rental market during this period to offset the decline in owner-occupancy. Credit availability collapsed in the aftermath of the financial crisis, thereby forcing many would-be first-time buyers into the rental market or going back to living with their parents. The shift in housing-stock demand towards the rental sector has also had consequences: rent inflation has been rising. The latest 12-month change in rental costs, according to the latest consumer price index report, is +3.8%. Numerous observers, including myself, believe this official

Thesis statement: Sydney housing prices are unsustainably inflated and are at a real risk of falling.

The price of houses are rising continuously in Australia from last few years and mainly two major cities Sydney and Melbourne faced more rise in price and its about 4-5 times the overall average earnings.

Demand for housing, particularly in Sydney and Melbourne, greatly outnumbers the supply available. Simple supply/demand economics tells us that this undersupply of property in the face of overwhelming demand will cause inflation. From March 2014 to March 2015, Sydney saw an average property price increase of 13.1% (ABS: Residential Property Price Indexes 2015). Currently, the RBA’s reaction to this is to play it safe by keeping cash rates at 2% (RBA: Monetary Policy Decision July 2015). The RBA want growth to be sustainable and long term on the Australian economy during a difficult time, but how does this affect the housing market? This lowers the risk of defaulted loans for buyers, particularly on fixed interest rate mortgages. ASIC chariman Greg Hedcraft says that Australia is experiencing a similar housing bubble to the U.S. pre GFC. This was caused by high interest rates and borrowers defaulting loans due to unexpected heightened interest rates, crushing the U.S. (and international) economy. However the RBAs recent interest rate decisions have been heavily criticised, with economists believing that these low interest rates, high consumer incentive to ‘buy now’, and predicted growing unemployment rates – peaking at 6.5% (Federal Budget 2015) could lead to future mortgage defaults and a large debt problem. Australia’s current economic state involving one

Recently, The Australian housing market has been growing rapidly which reflects the housing affordability crisis as the housing price rises much quickly than household incomes. There are two key observations of current Australian housing market from Yates, firstly today’s housing affordability problem is mainly a structural problem and intensified by cyclical pressures. It began 40 years ago when inflation switched focus on housing, besides, there are more renters than purchasers under today’s housing stress situation, and the housing

The low interest rate in Australia effects the housing market. Low interest rates allow property prices to push higher creating an unbalanced ratio between prices of property and income of owners of property and those who don’t. A housing bubble in the capital cities of Australia has potential to create significant danger to the Australia housing market and economy if interest rates are cut any

FHFA also released its House Price Index for June. Home prices for properties associated with mortgages owned or backed by Fannie Mae and Freddie Mac rose at a year-over-year rate of 5.60 percent in June as compared to May’s reading of 5.70 percent.

Starting back in 1997 when the residential prices began to appreciate into 2003, the rising home prices can be examined through economic fundamentals. These fundamentals explain the price of buying a home in relation to rentals and interest rates – meaning that the housing market was not overvalued. Post 2003-2004, the

First of all, the finding cannot be related back to all Auckland houses-it cannot even be related back to either Epsom or One Tree Hill, as sellers in the two suburbs appears to have different preference in selling methods and the two suburbs have considerably different median house prices mainly due to the difference of surrounding economy and education resource. I expect every suburb to have different median prices and selling preferences according to the different level of demand, thus when investigating sale price by selling method in a population containing two suburbs the result can be hard to relate back to either suburb because the suburbs in fact have very different backgrounds and in a mixed sample they affect each other

Statistics New Zealand (SNZ) (2014), “Consumers price index: Retrospective superlative index and impact of alternative housing weights”,available at: www.stats.govt.nz.

In 1999 the market was relatively stable and there were equal amounts of buying and selling of property. However, the market began to improve and the housing market was going up in value. People began listing their homes in the new market in order to make the most profit. The market was in a steady increase from 1999 to 2006. Although, in 2006 the market reached its peak and began to crash. The rapid fall is shown between the time frame of 2006- 2008 and culminates in 2009 when the market crashed. The prices of homes drastically decreased so people no longer wanted to sell but because of bad loans people defaulted on their mortgages and had no choice but facing foreclosure. No one wanted to sell their homes since homes were overpriced and no one wanted to buy because of the problems with the

The Reserve Bank of Australia (RBA) has left the cash rate unchanged at 1.5% and this has not been changed since august 2016 (Lowe, 2018). The RBA has left it unchanged as the low level of interest rates is continuing to support the Australian economy. The housing markets in Sydney and Melbourne have slowed. Nationwide measures of housing prices have changed little over the past six months, with prices having recorded falls in some areas. As seen in graph 1 in 2018 the forecast for Melbourne, Sydney and Brisbane are that housing prices will drop but in 2019 they will rise again. If the RBA were to raise interest rates home owners with mortgages would be in great financial trouble and the housing market may crash. This is why the RBA is not