Impacts Of House Prices On Socioeconomic Factors

Impacts Of House Prices On Socioeconomic Factors 1
LITRATURE REVIEW OF IMPACTS OF RISING PRICES OF HOUSES ON SOCIO-
ECONOMIC OF LOW INCOME EARNERS
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Introduction

Impacts Of House Prices On Socioeconomic Factors 2
Introduction
Housing is a basic need to all people as it is the fundamental human need and accounts to about
55% of the Australian assets with about 70% of Australians living in owner-occupied dwellings
and about 28% of Australians living in rented house (Beer et al. 2013, p.898). Housing plays a
major role in determining Gross Domestic Product of a country. The prices of houses across
Australia have continued to increase across Australia and other parts of the world with Sydney
leading the charge. The biggest price rise was experienced between the years of 2002 to 2004,
when prices rose from 16.49% to 16.725 and are also expected to soar to about 19 % over the
next three years, according to property forecaster BIS Shrapnel (Chyi &Reed 2014, p.30). The
rising of the house prices have impacted both the social and economic effects on people
especially the low-income earners in Sydney, thus the purpose of this literature review. The
paper explores the causes and effects of the social and economic effects of the rising prices of
houses in Sydney city, on the low-income earners.
Socioeconomic refers to the social and economic factors that affect the personality, lifestyle,
attitudes, region, and the relation to the environment. The socioeconomic factors include
education, income and occupation, culture, ethnicity and religion (Moulders-Jones et al. 2017,
p.9). Sydney is the capital city of New South Wales and the largest city in Australia with the
largest population, followed by Melbourne. The Sydney city experiences averagely 1.3%
Population Growth Rate per year, making about 4.5 million people out of approximately 20.47
million Australians. The city was the first place for the European settlement in Australia; hence
the development growth commenced from city and later spread to other home. This made the
city to become one of the world’s most multicultural cities, resulting to different language,

Impacts Of House Prices On Socioeconomic Factors 3
cuisine cultures, and ideas ranking as number7 of the country and ten of the most popular tourist
attraction destination.
Sydney city ranks highest as the business sophisticated country, second for innovativeness and
third for both technological and human capital availability in Australia city. The town ranks eight
most influential city in the world as it commands a large amount of foreign investment, creating
concentration of corporate headquarters, financial and technological services offices, racial
diversity, and business dominance. In the year 2016-2017, Sidney city recorded a significant
diverse manufacturing base in Australia with GRP of about $38 billion.
The Social and Economic status of Sydney
Sydney makes up of about 54,800 indigenous heritage, most of them belonging to British,
Chinese, Scottish, Germans, and Irish immigrants. The city always hosts events such the Sydney
Festival which is the Australia’s leading art festivals and ranks 13 in the top fashions capital in
the globe (Vecco & Imperiale 2017, p.8). According to GRP Sydney, 2015 economic baseline
Assessment report estimate is $ 334 billion that represented about 70% of the Gross State
Product. During 2012-13, the GRP recorded a growth rate of about 2.7%, and the contributions
of the critical industries have increased over the past five years.
Technical and scientific services contributes to about $ 28.8 billion, translating to about 10.5%,
however, the input of the key sector such as manufacturing dropped to about 7.8% from 10.2%.
Other strong contributing industries include transport, health services, warehousing and whole
trade that contributed to about $18.6, $ 17.1, $ 16.3, and $15.9 to GRP respectively (Blunden
2016, p.13). The housing industry that is: construction rental, hiring, and real estate’s services

Impacts Of House Prices On Socioeconomic Factors 4
also recorded steady growth over the past years with the contribution of about $15.5 translating
to about 3.7%.
Housing in Sydney
The majority of Australian occupies self-contained private houses such as flats while small
proportions live in institution facilities such as hostel and staff quarters (Chy & Reed 2014, p.
32). The accommodation, costs Sydney residents more than 50% of their income and median
house prices costs more than about $ 1 million in most areas, thus making the city to rank as the
third most expensive in terms of housing (Bentley et al 2016, p.215). The effect is as a result of
the substantial foreign investment that has placed more pressure on the demand for Sydney
residential market eventually increasing the house prices (Blunden 2016, p. 89). The following
factors have also contributed to the rising costs of housing in Sidney: income increase, the
demographic change, the high rents, lower interest rates, excellent credit availability, housing
speculative demand, and discount on housing investors. The rising prices of land brought about
by the high demand by the investors and house construction industries have affected the rise in
the rental rates in Sydney (Mangioni 2015, p.6).
low income
earners moderate income
earners high income
earners
0
20
40
60
80
100
comparison of affordability of housing in
sydney
comparison of affordability of
housing in sydney
Figure 1: comparison of house affordability among different income earners in Sydney