Demand and Supply of Homes in Australia - myassignmenthelp.com

Question: Discuss about theDemand and Supply of Homes in Australiafor Practices. Answer: In the recent years, the demand for homes in Australia has been on the increase. Studies show that the surging demand for houses in this country results from non-price factors. Foremost, major cities like Melbourne and Sydney are experiencing high population influx. As more individuals settle in these towns, the demand for homes has increased considerably. The rising demand for homes has also resulted from the low cost of borrowing for homes and improved access to credit. Moreover, increase in the incomes of Australians and tax concessions on housing have amplified the demand for homes in Australia. The rising demand has increased the price of homes and Australian cities like Sydney and Melbourne are among the places where the price of homes is exceedingly high globally(Dufty-Jones Rogers, 2016). Figure 1: Increase in Demand The rise in demand for dwellings in Australias housing market is shown by the shift of demand curve from D1 to D2. Consequently, the number of homes demanded increases from Q to Q1 and the price also rises from P to P1. The table one below depicts the annual change in residential property prices. Sydney and Melbourne recorded the highest increase in the price of houses, that is, 14.4% and 13.4% respectively(Australian Bureau of Statistics, 2017). Table 1: Extracted from Australian Bureau of Statistics Supply of Homes While the demand for dwellings has been on the rise, the supply has not responded to put the surging demand in check. Research shows that several factors are impeding the delivery of homes in Australia. For example, the approval of structures is delayed by government bureaucracies. Insufficient provision of vital infrastructures like roads, water and sewerage and difficulties in obtaining finances among the property developers also hinder the delivery of new housing units to the market(Dufty-Jones Rogers, 2016). The aftermath of this situation has been shortages and prices increases. Elasticity The price elasticity of demand for dwellings in Australias housing industry is inelastic. This reasoning is based on the fact that a house is a necessity and that is why the demand is high regardless of the price increase. Also, the alternatives to owning a home are limited, that is, renting or residing with a relative. High rental fee worsens the situation for Australians. Bibliography Australian Bureau of Statistics. (2017, June 20). 6416.0 - Residential Property Price Indexes: Eight Capital Cities, Mar 2017. Retrieved August 27th, 2017, from https://www.abs.gov.au/ausstats/abs@.nsf/0/510D8915596EEFE9CA257F1B001B0107?Opendocument Dufty-Jones, R., Rogers, D. (2016). Housing in 21st-Century Australia: People, Practices and Policies. London ; New York : Routledge.