The Budget Deficit And The Houses Affordability

This report will show an overview of the current state of the Australian economy and its management by the Federal government through examining economic indicators such as economic growth (GDP), unemployment, inflation and trade.

Affordable housing is slowly becoming not that affordable for the poor in Australia over the last decade, and the price is keep raising. It became a significant concern among a lot of Australians.

The figure obviously had not return to pre-crisis level. Moreover, recent commodity prices had fallen significantly which will affect Australia’s short and long term economy.

To tackle the housing affordability, first of all, it is crucial to lift the supply of housing as it will release the pressure on the housing price. Nevertheless, the supply of housing is inelastic as it requires an adequate fund, time, approval from the Government. Besides, the housing system is heavily dependent on the private sector. Thus, the Government should provide initiatives for housing providers to shift the supply of houses in the market. Australia would follow the policies from other countries to tackle the housing affordability. However, it has to fit in the Australian context. These policies might work well in other places but it does not mean that it will be applicable in Australia. The Singapore Government has a public

Housing affordability has been one of the most persistent national concerns mainly because housing costs are the biggest expenses in the budgets of most households. A typical American household spends more than a third of its budget on housing while poor and near-poor households commonly devote about half of their incomes to housing (Consumer Expenditure Survey, 2011) .

There has been a rapid growth in the service sector jobs and a strong decline in manufacturing employment (Murphy and Watson, 2009). Since the economic boom in the 1950s and 1960s, the Australian economy has been unable to stand the growth of living standards appreciated by households in that period.

Booms, busts, recessions, and growth; all of the preceding terms are characteristics of a typical market economy. There are times when an economy can flourish spectacularly and there are times when it can fail miserably. Consequently, it is the responsibility of a nation’s central bank to manage these fluctuations through conducting effective monetary policy. The following paper will assume the perspective of the Reserve Bank of Australia (RBA) and critically analyze the past, present, and future of the Australian economy while considering specific sectors.

Between 1960 and 2006 real house prices increased at an average of 2.7 percent annually, ahead of a 1.9 percent per annum growth in per household real incomes (Yates, 2008). Therefore, over the past half century, there has been an underlying structural affordability problem in Australia due to house price and household income.

Economic growth is the increase in value and amount of goods and services that is produced by an economy for needs of a population over a period of time. The economic growth is measured according to the GDP adjusted for inflation; real gross domestic product. The GDP is essentially the final value of goods and services produced by a nation.

Whilst the Australian economy has enjoyed an unprecedented period of economic prosperity that provided ample opportunities to address poverty, inequality and improve opportunities for the poor. The real kicker is the economy would have gotten a welcome boost if these issues had been addressed. Instead, successive governments have failed to meet our infrastructure needs, failed to plan for the future and failed their social obligations.

House affordability is a perennial issue in Australia and has worsened drastically in the last 3 decades.

A statement about the main economic problems currently in the Australian economy or problems it may face in the future.

The economic growth rate is sluggish at best with the year 2005 having a growth rate of 5.25 percent and 2006 having a slightly lower growth rate than the prior year. Many of these setbacks are due to the

The Conference Board Leading Economic Indicator (LEI) for Australia has shown an increased in May after a slight decline in April. Besides, the six-month growth rate in the leading economic index has also improved to 2.1 percent growth between November 2013 and May 2014, up from 1.4 percent for the previous six months. Therefore, its strengths among the leading indicators will be more than the weaknesses, hence there is a positive outcome for the next 12 months for Australian economy (The Conference Board,

In March 2015, Greg Jericho published an article called Weak, weak growth and six things about the state of Australia’s economy that outlined how in the past 6 out of 10 quarters the Australian