Demand, Supply, Elasticity Of Demand And Supply

Secondly, in the past few years, household debt has increased rapidly. On one hand, it has deep influence on each Australian. With one dollar earned, one Australian is now in debt for two dollars. Australia’s debt for property is just lower than Switzerland in the whole world and doubles as much as America. Compared with the increase of house debt, salaries of Australians have remained steady, which means people’s capacity to repay debt hasn’t improved. Australians have been recorded low wage growth. From January to March 2017 wages grew just 0.5 percent. Over the previous year, wages grew a total of 1.9 percent. From 2011-2016 wages grew just 13 percent (Anderson 2017). Considering price to income ration index, housing affordability in Australia has broadly declined in the past few years. Nevertheless, it’s very easy for anyone to get loans from the bank. People don’t need strict assessment of credit to get loans and the government has some policy like first home owners scheme to encourage house loans. As the interest rate is at the lowest point in history, any boost of the interest rate would cause hundreds of thousands of households under mortgage depress. In addition, the ease to get loans make more house demand, which eventually make the price going up. If people can only use their incomes to buy properties, the demand would definitely not as high as nowadays. The American house crash

Housing affordability is the relationship between household income and burden of housing costs and is an issue when it prevents population groups from accessing appropriate or secure housing. (3, 4) Australia has seen a severe escalation in rent and house prices that have not been matched by growth of household income. This decline in housing affordability is a result of economic growth, tax incentives for owners and investors, more accessible finance and population growths, which consequently result in an increased demand for housing. (3, 5) Moreover, this is further compounded by land and development limitations that restrict increases in housing

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)

Macroeconomics is an excellent tool for the analysis of the housing industry as something like a capital good, as a home is considered to be, cannot easily be studied in a short-term platform. Real estate is a good that costs several times more than an average persons annual income, in the United States that number is typically 7 times as much, and in the United Kingdom that number is 14 times as much. Several factors of both supply and demand directly impact the housing market on a macroeconomic scale. (Business Economics, 1)

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

Multiple reasons exist for the the lack of affordable housing. On the demand side these include population growth and increased migration to urban areas, easily accessible housing finance, tax incentives and a “strong cultural preference for owner-occupied detached houses”. On the supply side, affordability problems are exacerbated by inflexible and slow responses to the need for new housing stock, lack of infrastructure and generally inefficient planning processes and development assessment by local governments.

The real estate market of Australia tries to develop and emerge continuously. As an outcome, many a number of Australians invest on properties without any hesitant. But, the basic concepts in relation with the real estate industry are still fairly new to several consumers and are also easily confused even with the most common terms utilized in the industry.

Price elasticity of demand enables business organizations to predict how their total revenue will be effected in the event they change the prices of their products. When a given good has inelastic price elasticity of demand i.e. Ed 1, then the percentage change in the quantity demanded is greater that the change in price. Thus, raising the prices of such commodities results to decline in the total revenue because the business may loss customers to their competitors. Nonetheless, reducing the prices of goods with elastic elasticity of demand increases the total

I shall look into details how policies in the public and private housing market and the immigration policies affects the private market, despite property prices steadily increasing, the private property market in Singapore continues to boom. There are many factors that play a role in this drastic demand for private property

Every day people use products without thinking about the significance of that particular product. Many people do not realize how important these products are and how much one product that is used every day affects the economic status of not only the country but the world. Wheat is used to make a large number of products which include beer and bread. The next few pages of this report will discuss how supply and demand for wheat shifts, how it affects price, and whether or not wheat is a luxury or a necessity will also be analyzed.

A difficult characteristic to understand about the housing market is how a price is given for a particular house. That price will be designated to that particular house alone. All houses have various pricing, so I can’t always assume that one will cost more or less than any other. The pricing for houses vary based on their characteristics. Each characteristic must be analyzed to determine its contribution or detraction toward the price. I have taken some of these characteristics and modeled the relationship between them and the price of real estate for a specific area.

This report examines the housing affordability crisis in Auckland, the current situation of the housing market, and extent of this problem. Auckland is in a deficit of houses due to the difference in demand and supply factors. The demographic and economic factors are the main reason for the increase in demand for houses. The supply side is not performing up to the mark to satisfy the demand in the market. The first home buyers are finding difficulties to make choice on their housing needs. The median households are struggling with the high rentals in Auckland market. Lower income households with faces a greater affordability pressures than those are living outside Auckland. There is a shortage in land and houses that are affordable for lower income households. The report suggests some new factors that can be considered to solve the affordability crisis.

Supply and demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.

The price elasticity of demand for the iPhone is different depending upon on where it is being sold. A prime example if the IPhone is being sold in the United States it is considered an inelastic demand. Most smartphones are considered a luxury item but if you compare that to the first world country, it is different. The average incomes in the United States are considered higher than most countries, therefore the price of an iPhone 5 or iPhone 6 are considered affordable. The price elasticity of demand of an iPhone in high income nations is considered inelastic. The price elasticity of demand of the iPhone in countries like, Malaysia are considered as elastic. The iPhone is considered as an elastic demand in countries where the average income is not that high compared to the first world countries. Thus, the price elasticity of demand is elastic, the price of an iPhone is considered expensive to us but the popularity of iPhone is still high so if the price of an iPhone is dropped, the demand would increase higher. The price elasticity of supply of an iPhone is considered as elastic during the early period. . The determinants of price elasticity of supply are the amount that costs as output rises, which means the lesser the additional costs of producing additional output, the more Apple will produce for a given increase. There an iPhone’s hype that slowly affected the community which mean

Elasticity of demand is shown when the demands for a service or goods vary according to the price. Cross-price elasticity is shown by a change in the demand for an item relative to the change in the price of another. For substitutes, when there is a price increase of an item, there is an increase in the demand for another item. When viewing complements, if there is an increase in the price of an item, the demand for another item decreases. Income elasticity is shown when there is a change in the demand for a good relative to a change in income. This concept is shown in how people will change their spending habits when their income levels change. For