What Is The Increase Of House Income

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,

Post-housing/financial crisis of 2007-2009, the housing market seems to be showing signs of improvement after great downturn. With the downturn in housing prices, many homeowners did not have enough equity to avoid taking a loss on the sale of their homes so they are sitting with home loans based off of higher-than-current mortgages. However, in November the National Association of Home Builders’ sentiment index jumped to 20, which is the highest reading in over a year. Demand for mortgages has also seemed to pick up a bit according to the Fed’s 4th quarter loan survey. Construction remains at historically low levels but has increased as of late, and the number of

Big banks in the middle 2000s were flourishing of the money made from selling the mortgages to big investors. While this was great when the banks were giving money to people who were reliable and were going to pay their mortgages every month. And when the investors were making such a hefty profit they wanted more. This is when Subprime mortgages were widely used, giving less reliable lower credit scores the opportunity to get homes. The banks knew that these people would not necessarily always be able to pay, which was the one of many mistakes (Crash Course.) The banks learned that while it did sometimes work out, the consequences of giving out too many unreliable mortgages can bring the whole nations economy down for the housing market has always been the pillar of the economy. The greed of the extremely wealthy continued to overpower the common sense of the

Increase in immigrants: The main reason for the rise in prices of houses is the increase in population of the nation due to the emergence of immigrants and restrictive planning regulation that have limited the release of new land for development (Street A, 2012). As with the increase in demand, the supply of houses goes down.

Rising asset prices, which will cause a rise in house prices and thus increase in wealth (Pettinger).

Housing demand includes household growth, real incomes, real wealth, tax concessions to both owner-occupied and rental housing, concessions to first homebuyers, returns on alternative investments, cost and availability of finance for housing and the institutional structure affecting housing finance provision (Yates, 2008). The growth in the number of households and in real income results in the increased pressure on housing demand.

A decline in house prices is usually a signal to households that the economy is not performing as well as before. Declining house prices will have a negative impact on the Australian economy which will reduce the wealth of those households who have ownership of property.

Some people wrongfully assume that home mortgage rates fall when there is an economic boom. This is not true, since it is more likely for home mortgage rates to fall when there is a struggling

In 2010, the American economy was struggling to bounce back from a devastating collapse in 2007. The housing market had collapsed and economists were baffled. The stock market did not entirely crash, yet the economy still could not be stimulated. For the most part, much of the financial industry was left unregulated, allowing banks to loan money to people trying to buy houses, with no guarantee of the money being returned. With a low interest rate of 1.24 percent, people were looking towards the housing markets as an investment. The low interest rate sparked a demand for both mortgages and housing, expecting the prices of houses to rise. However, in 2004, the rates began to rise. By the end of 2004, the interest rate was 2.25 percent.

Tighter banking policies will make sure that the amount of loans banks make are appropriate to the consumers potential earning and debt repayment. The effect of this change will mean more consumers will be rejected for home loans and this therefore will lead to less people going into the housing market to buy or invest. This will eventually lower housing prices. Brendan Coates from Grattan Institute that tighter lending policies will reduce the amount of money future buyers could borrow therefore in the short term pushing down property prices as demand will be

The Housing Industry Association of Australia (HIA) (Housing Industry Association, 2003, p. 14) estimates that, in the case of new housing, “the total indirect tax take is over $124,000 in Sydney and $88,000 in Melbourne”. In order to reduce the rate of house price inflation, the government was requested to reduce the current levels of charges. Owing to a number of interacting forces determining housing prices are unlikely to have the desired impact. What is more, the rising population in Australia results in the growth in the number of households, the main unit of demand in housing markets. Due to Immigration of other countries, this has been a fundamental factor of housing developments and price inflation in some areas over the long term. With the growth of economy and improvement of living standards, Australians are able to afford the house, leading to the price rise. It is likely that house price inflation can occur on some areas where the average incomes of individuals increased. In almost all societies, housing in behalf of the main family fortunes. When the value of existing house rise, the house owners and real estate companies would be confident to sell house with raising the housing

Monetary policies play can or not play a major role in the housing developments. This all depends on the supporting evidences provided that aligns with the goals of the policy makers. In this scenario monetary policy was not the initial reason for the extraordinary strength in the housing markets. According this case study, a relationship between interest rates and housing activities is not adequate enough to explain the rise in residential investments or house prices. However some increase in housing markets can attest to lower interest rates and favourable monetary policies that followed after the 2011 recession, which was actually a small factor, As

The housing market can be closely related to mortgage rates and the bond market. Forecasted interest rate activity can be attributed to the fluctuations in the housing market. It can be expected that as interest rates rise there would be a decline in the housing market.

As the current interest rate set by the Reserve bank of Australia is 1.5% the likelihood of saving will decrease and instead consumption from investments is more likely to increase. This will also leave homeowners with more disposable income as the cash rate also decreases their mortgage rate also decreases

The government began to ease the restrictions of financial institutions from 1975, and the deregulation of banking was introduced in 1986, the main effect of the deregulation programme was to remove the legislation that restricts competition within finance sector. Since 1987 there have been only two categories of financial institution: