economics

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Key macro and micro factors influencing housing in Australia
Australians have placed a high degree of importance on home ownership, which is perceived as important for the stability of family life and wealth of creation. Over many decades the Australian government has been encouraging home ownership through direct grants to first-time home buyers (Plumb et al, (2010, p. 1), reserve bank of Australia).According to the Australian bureau of statists in the housing departments around 70% of Australians live in owner-occupied dwellings, and of these 50% own their own properties without a mortgage or a loan. In conclusion around 25% of Australians live in rented accommodations and more than 3 quarters of Australians rent from private landlords (Mustafa 2014, p. 1, Australian bureau of statics).Housing plays a strong role in regards to the social wellbeing of Australians. Good housing has provided good social and economic environment for society (Mustafa 2014, p. 1, Australian bureau of statics).
Factors influencing the housing market
Interest’s rates
These are the most important factors which affect housing and the property market in Australia. The definition of interest rates according to investor words is “a rate which is charged or paid for the use of money’. Interest rate is calculated by dividing the amount of interest by the amount of the principal. Interest rates in Australia change as a result of inflation and rates of the reserve bank of Australia change. When interest rates are low the demand for housing rises due to the bank being able to lend more people money thus the housing market increases, however when the interest rate rises the bank makes cuts towards the interest rates which means less profit is made on each lo...

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...0.90% in December 1992 and also a record low of 4.00% in 2008. There has been a decrease in unemployment yet a rapid increase in employment from 18,100 people being unemployed compared to 11,553,200 being employed as shown in the graph below (lee 2014, p 1)

There are three key factors that influence the current Australian housing market; these are interest rates, economic growth and unemployment, all three of these factors uniquely play a part in the fluctuating rate of housing in Australia. As a result of these factors housing demands will never be stable due to external factors restricting people’s alibility to apply for finance and also due to job wages fluctuating making it very difficult to maintain a proper job as a result of low or high income thus housing will always vary depending on the person income and the Reserve banks interests rates.

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