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Victims of Australia's Property Market: An Economic Analysis

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Added on  2023/06/03

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This presentation analyzes the victims of Australia's property market using economic theories and concepts. It covers the impact on renters, singles, owner occupiers, and retirees. The presentation also discusses the increase in demand for rentals, decline in home ownership, and the burden of high land tax on retirees.

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Economics
Assignment
Name of the Student
Name of the University
Course ID

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Introduction
Victims in Australia’s property market
Steep property prices in Melbourne and Sydney
Decline in home ownership
Increase in mortgage among young homeowners
Overlooked victims
Market analysis using economic theories and concepts
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Renters
Increase demand for rentals
Demand side pressure increases rents (Scutt, 2018)
Only 5.7 percent deemed to be affordable
Dilemma among the renters
Renting means paying mortgage of someone else
Money could be invested to build wealth and security in
the property market
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Renters
Rental demand curve is DD
Rental supply curve is SS
Initial rent is at R*
With increase in demand, demand
curve shift outward to D1
Increasing pressure on rents (Cowell,
2018)
Figure 1: Demand and
supply in rental market

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Singles
Difficult situation for singles
Home ownership become tougher
Need at least one assurer to raise loans
Affects housing affordability
Difficulties in spending for maintenance and repair
(thenewdaily.com.au, 2018)
Single women leaving the labor force cannot afford
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Singles
Demand curve for Singles is DD
Supply Curve is given as SS
Initial equilibrium is at E1
Lower housing affordability for Singles
Lowers the demand
Shift in demand to D1D1 (Baumol &
Blinder, 2015)
Downward pressure in housing price
Figure 2: Demand and supply
in property market
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Owner Occupiers
Relatively less problem for owner occupiers
Inflated price of housing
Have to stay long in a single place
Switch to bigger home is expensive
Agent fees, cost of marketing and stamp duty lead to
additional cost (thenewdaily.com.au, 2018)
Prefer to spend for renovation

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Retirees
Many pension holder have own house
Bear the burden of high land tax
Tax bill increases with increase in property value
Retirees though have assets but lack cash (thenewdaily.com.au,
2018)
Decline in percentage of men and women living with parents
Demand for houses among retirees reduces because of increasing
cost burden
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Conclusion
Sharp increase in property prices
Some overlooked victims of property market
Renters ; Higher rent and reduced demand
Singles ; Lower affordability lowers demand for new houses
Owner Occupiers; Face higher cost switching to bigger home
Retirees; Lack of the cash and higher burden of tax cause
resentment among them.
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References
Baumol, W. J., & Blinder, A. S. (2015). Microeconomics: Principles and policy.
Nelson Education.
Cowell, F. (2018). Microeconomics: principles and analysis. Oxford University
Press.
Scutt, D. (2018). Here's where housing rents are rising the fastest in Australia.
Retrieved from https://www.businessinsider.com.au/australia-rental-rates-cost-of-
living-q2-2018-7
The overlooked victims of Australia's runaway property market | The New Daily.
(2018). Retrieved from
https://thenewdaily.com.au/money/property/2017/08/04/victims-property-market/

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