economics and the housing mark
At present, not a day passes where there isn't a media report about the domestic housing/property market. The property market has proved its significance in the context of overall domestic activity, investment and employment. Underpinning this fascination with the property market are some economic imperatives that require examination. For the purpose of this assignment the product of choice is a residential house in the Melbourne area. The product is examined from both a macroeconomic and microeconomic perspective. In order to understand basic economic concepts this paper assesses how the determinants of demand and supply for housing are influenced, examines trends in consumption and price and estimate the own price elasticity.Housing has enormous economic, social and symbolic significance both for individual Australians and for Governments. It has a special role in the Australian economy: · The annual value of dwelling sales in recent years is equivalent to 15%-18% of the value of Gross Domestic Product (GDP)· It is a significant component of households wealth, comprising over 60% of total ho
CONCLUDING COMMENTSIn undertaking this economic analysis it has been established that there are a range of determinants of demand and supply at work in the Melbourne housing market. The effect of low interest rates has also increased the availability of consumer credit. 7% respectively from May 2001 to May 2003. A change to a factor such as interest rates, for example, is likely to reduce the income elasticity of demand for houses in Victoria. Whilst consumer credit remains affordable for Victorian consumers, house purchases remain popular. To measure price elasticity of demand we measure the percentage change in quantity demanded and divide it by the percentage change in price. The generation of income from rental earnings to supplement or make up for the pension or inadequate superannuation is an incentive towards fuelling the activity in the property market. The demand for home ownership in Australia is and continues to maintain its steady pace. Many consumers are concerned that superannuation or a pension will be far from enough to retire on comfortably in the future. To measure price elasticity of supply we measure the percentage change in quantity supplied and divide it by the percentage change in price. Current tax rules allow housing investors for example to pass on part of their losses to the government.
Common topics in this essay:
ABS Cat,
BIS Shrapnel,
CONCLUDING COMMENTS,
OPPORTUNITY COST,
HOUSE INTRODUCTION,
Victoria Population,
HOUSE Demand,
Victoria Price,
Study Guide,
RBA Publication,
housing market,
price elasticity,
elasticity demand,
demand supply,
house prices,
demand housing,
property market,
percentage change,
australian bureau statistics,
australian bureau,
determinants demand,
income elasticity demand,
price elasticity supply,
price elasticity demand,
elasticity demand measure,
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