Fina 3324 Investment Analysis Assignment. Part A:. 1. Overview
1641 WordsMay 8, 20177 Pages
FINA 3324 Investment Analysis Assignment
1. Overview of Perth housing
Perth, Western Australia (WA), was once a booming rich mining state. According to Vetti Kakulas (2017), during the mid-2000s, the commodities boom resulted in more full-time jobs due to the high salaries offered by mining giants, attracting “FIFO workers”. Due to a huge decline in commodities price over the years, more than 20,000 full time jobs in the mining industry have been cut in the past two. “When the mining industry expands people move over from the eastern states” (Kakulas 2017), which will cause an increase in housing demand. Since the end of the boom, people have been leaving the state at a high rate due to an increasing unemployment…show more content…
The increase in population caused a spike in housing demand, resulting in a rapid increase in property prices. When property prices are high, people will turn to rental, instead of mortgaging, as it is more affordable. The decrease in demand for properties will also cause a decrease in rental prices. At the end of the mining boom, people were leaving the state rapidly due to the increasing unemployment rate. There were more departures than arrivals in WA in 2014-2015, resulting in plunging rent and housing prices in Perth (Kakulas 2017).
1.1.2 Government policy
Government policies also play a big role in promoting home ownership, improving affordability as well as increasing of housing supply. An example is the programs funded by the Commonwealth-State Housing Agreements or the War and Defense Service Home schemes to increase number of houses. Between 1947 and 1961, the number of houses increased by 50% as the Commonwealth and State Governments directly contributed 24% of the total increase in the housing supply over this period (Fitzgerald, 2017). During this period, the rate of home ownership increased from 53.4% to 70.3%, which is the largest increase in home ownership in Australia, as seen in Appendix 2. The Federal and State Government housing policies were successful as they achieved the objective of increasing the supply of housing and rate of home ownership. A surge in supply of housing is beneficial as it eases pressure on housing