Analyzing the Housing Market of Australia with Demand and Supply Concepts

Running head: MANAGERIAL ECONOMICS
Managerial economics
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Executive Summary:
The report has intended to analyze the housing market of Australia with the help of some
economic concept. Hence, before this, the report has selected some newspaper articles to
discuss the entire scenario. After that theoretical discussion on demand and supply has been
done. Those concepts are used further to discuss the real scenario of this housing market. at
the end, some recommendation has provided to control this situation.

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Table of Contents
Introduction:...............................................................................................................................2
Outline of theory:.......................................................................................................................2
Application of theory to article:.................................................................................................7
Conclusion:..............................................................................................................................11
References:...............................................................................................................................12

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Introduction:
The property prices in Australia have increased significantly since 2001, which in turn
has generated huge debate among economists and policymakers. The house prices of this
country have increased at a faster rate compare to incomes and rents. Some chief reasons
behind this increase in property prices are credit availability due to financial deregulation,
low rate of interest since 2008, limited supply of land and high population growth and so on.
According to the Guardian, an Australian newspaper, homeownership of this country is
chiefly depended on consumer income, which in turn has increased the gap between rich and
poor people (www.theguardian.com 2018). People with lower income have spent
comparatively more prices or rents compare to one with higher income. In this country, most
of the cities, like Sydney and Melbourne, have experienced higher amount of median house
price compare to the median household income, which in turn has decreased the affordability
of houses for Australian citizens. However, the housing prices is going to decreased in 2018
as the index of national median house price has decreased by 0.3% in December 2017
(Jericho 2018). According to the Sydney Morning Herald supply of home buildings has not
affected the housing price to decrease further. The chief reason behind this price slowdown is
tough banking regulations for receiving home loans. In this context, it can be mentioned that
the government of Australia has supplied enough houses to meet the demand for this product
in market. However, this excess supply of house does not follow the supply law and
consequently the market price has remained at a higher level.
Outline of theory:
The Australian market of houses can be analyzed significantly with the help of
demand and supply concepts of microeconomics, where elasticity of both these two factors