A Comparative Study of the Australian Real Estate, During Various Economic Downturns
Added on 2023-03-30
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Running Head: A COMPARATIVE STUDY OF THE AUSTRALIAN REAL ESTATE,
DURING VARIOUS ECONOMIC DOWNTURNS
A Comparative Study of the Australian Real Estate, During Various Economic Downturns
Name:
Academic Affiliation:
Date:
DURING VARIOUS ECONOMIC DOWNTURNS
A Comparative Study of the Australian Real Estate, During Various Economic Downturns
Name:
Academic Affiliation:
Date:
A COMPARATIVE STUDY OF THE AUSTRALIAN REAL ESTATE, DURING VARIOUS
ECONOMIC DOWNTURNS 2
Table of Contents
SECTION 1.....................................................................................................................................4
Introduction..................................................................................................................................4
Problem statement........................................................................................................................5
Research aim and objectives........................................................................................................6
Justification of the project............................................................................................................7
Potential research output..............................................................................................................7
SECTION 2.....................................................................................................................................8
Conceptual framework.................................................................................................................8
Economic Downturns...................................................................................................................9
Construction cycle......................................................................................................................13
Australian Context.....................................................................................................................13
Inflation and interest rates......................................................................................................14
The aftermath of the recession...............................................................................................15
Methodology..............................................................................................................................16
Research Approach....................................................................................................................16
Population, sample Size and Sample procedure........................................................................16
Data analysis..............................................................................................................................17
SECTION 3...................................................................................................................................18
ECONOMIC DOWNTURNS 2
Table of Contents
SECTION 1.....................................................................................................................................4
Introduction..................................................................................................................................4
Problem statement........................................................................................................................5
Research aim and objectives........................................................................................................6
Justification of the project............................................................................................................7
Potential research output..............................................................................................................7
SECTION 2.....................................................................................................................................8
Conceptual framework.................................................................................................................8
Economic Downturns...................................................................................................................9
Construction cycle......................................................................................................................13
Australian Context.....................................................................................................................13
Inflation and interest rates......................................................................................................14
The aftermath of the recession...............................................................................................15
Methodology..............................................................................................................................16
Research Approach....................................................................................................................16
Population, sample Size and Sample procedure........................................................................16
Data analysis..............................................................................................................................17
SECTION 3...................................................................................................................................18
A COMPARATIVE STUDY OF THE AUSTRALIAN REAL ESTATE, DURING VARIOUS
ECONOMIC DOWNTURNS 3
Organization of the study...........................................................................................................18
Project budget and budget justification......................................................................................19
Gantt chart..............................................................................................................................19
Project budget.........................................................................................................................21
References......................................................................................................................................22
ECONOMIC DOWNTURNS 3
Organization of the study...........................................................................................................18
Project budget and budget justification......................................................................................19
Gantt chart..............................................................................................................................19
Project budget.........................................................................................................................21
References......................................................................................................................................22
A COMPARATIVE STUDY OF THE AUSTRALIAN REAL ESTATE, DURING VARIOUS
ECONOMIC DOWNTURNS 4
SECTION 1
Introduction
Countries’ economies pass through different stages that affect the consumption rate of
consumers. During the economic booms, recession and bust, consumers purchasing power and
behavior tends to alter, for example during the booms, customers tend to buy luxurious items
such as cars while during recessions they limit their purchases to the basic goods only
(Hasanshahi, 2015). The different phases directly affect the economy along with other sectors.
Real estate sector forms one of the global economic contributors since the major recent economic
downtown. For example, United States physical property dictates for more than a third of the
total assets in respect to the nonfinancial private sectors (Hatchondo, Martinez & Sánchez,
2013).
Large population across the world holds their weal in forms of homes and buildings
rather than in the financial assets. Over the past years in numerous countries, the prices of houses
have been strong as a result of high house price along with the low-interest rates that have
enhanced the mortgage refinancing activities thus stimulating customers to desire to spend on
house purchasing. On the other hand, the price to commercial property in most of the countries
have remained below the peak level during the 1980s and 1990s, however, the rates for the
commercial properties loans have remained reasonably in good shape despite the delinquency,
due to the low share of the nonperforming loans. The strength of the real states and the resilience
of financial institutions have been in constraints especially in the 1990s. In the previous fiscal
ECONOMIC DOWNTURNS 4
SECTION 1
Introduction
Countries’ economies pass through different stages that affect the consumption rate of
consumers. During the economic booms, recession and bust, consumers purchasing power and
behavior tends to alter, for example during the booms, customers tend to buy luxurious items
such as cars while during recessions they limit their purchases to the basic goods only
(Hasanshahi, 2015). The different phases directly affect the economy along with other sectors.
Real estate sector forms one of the global economic contributors since the major recent economic
downtown. For example, United States physical property dictates for more than a third of the
total assets in respect to the nonfinancial private sectors (Hatchondo, Martinez & Sánchez,
2013).
Large population across the world holds their weal in forms of homes and buildings
rather than in the financial assets. Over the past years in numerous countries, the prices of houses
have been strong as a result of high house price along with the low-interest rates that have
enhanced the mortgage refinancing activities thus stimulating customers to desire to spend on
house purchasing. On the other hand, the price to commercial property in most of the countries
have remained below the peak level during the 1980s and 1990s, however, the rates for the
commercial properties loans have remained reasonably in good shape despite the delinquency,
due to the low share of the nonperforming loans. The strength of the real states and the resilience
of financial institutions have been in constraints especially in the 1990s. In the previous fiscal
A COMPARATIVE STUDY OF THE AUSTRALIAN REAL ESTATE, DURING VARIOUS
ECONOMIC DOWNTURNS 5
recessions, commercial sectors were the major contributors to the growth of the banking issues,
thus the inconsistent downturns caused reduction of profitability and quality of the Real Estate.
Thus the financial housing booms and busts have detrimental impact to both the financial and the
real economy, thus the present paper aims at comparing the impact of Australian Real Estate
during the various economic downturns.
Problem statement
After the 2006-2007 financial crisis economists majorly focused their attention to the real
assets cycle since the market volatility cannot be explained by modes of pure rational choice.
Most of the investors are currently worrying about the fluctuating prices of the houses that
suggest that the demand for houses would be relatively inelastic in the short run in regard to the
number of units. In 2nd January 2019, Australian Real Estate priced reduced by 4.8% that
translated as the biggest global price fall during the financial crisis of 2006-2007 (Higgs, 2012).
Australian cities house prices have kept on changing for the past few years, for example,
between November and December 2016, the price grew by 1.4% translating into 10.9% annual
growth since 2015. Houses in Melbourne recorded the highest house price thus making so them
undesirable for the local buyers.
The Australian economy has been affected byte global financial crisis thus leading to
significant variation of house prices in the country. The highest house price increase occurred
from 2006 to 2007 after the fall in 2004. The Australian house price grew by about 1.4%
between November and December in 2016, with annual. This made Australian government
institute 100 percent deposit on the insurance in reaction to the fiscal disaster and use the surplus
ECONOMIC DOWNTURNS 5
recessions, commercial sectors were the major contributors to the growth of the banking issues,
thus the inconsistent downturns caused reduction of profitability and quality of the Real Estate.
Thus the financial housing booms and busts have detrimental impact to both the financial and the
real economy, thus the present paper aims at comparing the impact of Australian Real Estate
during the various economic downturns.
Problem statement
After the 2006-2007 financial crisis economists majorly focused their attention to the real
assets cycle since the market volatility cannot be explained by modes of pure rational choice.
Most of the investors are currently worrying about the fluctuating prices of the houses that
suggest that the demand for houses would be relatively inelastic in the short run in regard to the
number of units. In 2nd January 2019, Australian Real Estate priced reduced by 4.8% that
translated as the biggest global price fall during the financial crisis of 2006-2007 (Higgs, 2012).
Australian cities house prices have kept on changing for the past few years, for example,
between November and December 2016, the price grew by 1.4% translating into 10.9% annual
growth since 2015. Houses in Melbourne recorded the highest house price thus making so them
undesirable for the local buyers.
The Australian economy has been affected byte global financial crisis thus leading to
significant variation of house prices in the country. The highest house price increase occurred
from 2006 to 2007 after the fall in 2004. The Australian house price grew by about 1.4%
between November and December in 2016, with annual. This made Australian government
institute 100 percent deposit on the insurance in reaction to the fiscal disaster and use the surplus
A COMPARATIVE STUDY OF THE AUSTRALIAN REAL ESTATE, DURING VARIOUS
ECONOMIC DOWNTURNS 6
budget to support the house costs, though, the continuation of the firm increase of home costs
along weighty venture of banks mortgage credits tend to increase the financial instability of the
country. According to Higgs, (2012) predicted, the price of houses is estimated to rise in the next
few years, thus forming the problem of the current study. The current study this aims at figuring
the economic consistency under different phases of the Boom, Recession and Bust cycle in
Australia in regard to Real Estate Sector.
Figure 1: Shows the population increase among the Australian Cities, obtained from( Higgs
2012).
Research aim and objectives
The intention of the current paper is to recognize the impact of the boom, recession, and
bust on the Australian physical property, throughout several trade and industry downturns. To
achieve this, the investigator thus has to attain the subsequent reasons:
ECONOMIC DOWNTURNS 6
budget to support the house costs, though, the continuation of the firm increase of home costs
along weighty venture of banks mortgage credits tend to increase the financial instability of the
country. According to Higgs, (2012) predicted, the price of houses is estimated to rise in the next
few years, thus forming the problem of the current study. The current study this aims at figuring
the economic consistency under different phases of the Boom, Recession and Bust cycle in
Australia in regard to Real Estate Sector.
Figure 1: Shows the population increase among the Australian Cities, obtained from( Higgs
2012).
Research aim and objectives
The intention of the current paper is to recognize the impact of the boom, recession, and
bust on the Australian physical property, throughout several trade and industry downturns. To
achieve this, the investigator thus has to attain the subsequent reasons:
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