Housing Policies and Impacts on Housing Supply and Demand in Australia
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This article discusses the housing policies in Australia and their impacts on the housing supply and demand. It covers the National Rental Affordability Scheme, housing subsidies, tax cuts, and their effects on the housing market.
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Running head: ECONOMICS ASSIGNMENT Economics Assignment Name of the Student Name of the University Author Note
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1ECONOMICS ASSIGNMENT Table of Contents Introduction................................................................................................................................2 Housing policies.........................................................................................................................2 Impacts of housing policies on the housing supply and demand...............................................4 Conclusion..................................................................................................................................4 References..................................................................................................................................5
2ECONOMICS ASSIGNMENT Introduction The housing sector of Australia is one of the most booming sector in the country as well as in the international framework. Much of which can be attributed to the increasing economic and industrial prospects of the country, which in turn has led to an increase in both the domestic as well as immigrant population of the country, who migrate into the country with the objective of finding better economic, job prospects and an overall better life (Austin, Gurran and Whitehead 2014). This in turn has led to a considerable increase in the demand for housing properties in the country, thereby leading to an acute affordability crisis in the housing sector of the country, thereby leading to the loss of welfare of a significant share if the population of the country, especially the lower and the middle-income classes of the population.Toaddresstheproblem,thegovernmentofAustraliahasplannedand implemented several policies, the primary ones and their impacts on the housing demand and supply are discussed as follows. Housing policies The main policies and steps taken by the government to bring the housing market in a optimal position are as follows: a) National Rental Affordability Scheme-The NRAS Scheme commenced in 2008 and the main aim of the policy is to increase the supply of the rental housings in the country at affordable rates. The government planned to do the same by providing the housing suppliers with an annual incentive for ten years, provided that they supply their housing assets to the renters at the rates which are at least 20% below the rates which usually prevail in the housing markets of Australia (Dss.gov.au 2018). The scheme aims to provide up to 38,000 properties under this scheme and has nearly 133 housing providers which include property developers as well as non-profit building companies and community housing suppliers.
3ECONOMICS ASSIGNMENT b) Housing subsidies-Apart from the increase in the supply of rental apartments, the Australian government also provides subsidies to the participants in the housing sector of the country, through both cash modes as well as tax reliefs. The primary ones of the cash subsidies provided by the government of the country are as follows: First Home Owner Grants-This scheme, funded primarily Federal government and supported by the state governments has been existing from 2000, where the First Home Owners are provided robust financial assistance from the government, thereby helping to boost their affordability (Randolph, Pinnegar and Tice 2013). Rent Assistance-Under this scheme, the people who live in non-government rental accommodations receive this assistance, where the government makes a co-payment of 75 cents for each dollar paid for the rent of the house, above a certain threshold, with the maximum of the rent and rental assistance varying according to the type of houses where the individuals live and their socio-economic status (Dss.gov.au 2018). Grants for social and affordable housing-Both the state as well as the Federal government of the country provide various housing subsidies and programs for easing the affordability crisis in the sectors. The primary one is the National Affordable Housing Agreement, where the governments of the country provide tied funds, specifically for remote and indigenous housing and for housings for state and national territory (Shapingfutures.gla.ac.uk 2018). c) Tax cuts-There are also some indirect policies like that of tax cuts and negative gearing, which have been launched and implemented by the government of the country, which has helped in indirectly boosting up the demand and affordability of both rental as well as owner occupied housing accommodations.
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4ECONOMICS ASSIGNMENT Impacts of housing policies on the housing supply and demand The cumulative effects of the above discussed policies can be seen to be boosting up the supply of housings in the country as the number of houses getting added are crossing the number of housings in London and New York. However, the subsidies and financial supports provided by the government has been having positive impacts on the demand side also, as the aggregate demand for housing in the country has been increasing substantially, thereby preventing the affordability crisis to cease in the housing sector (Haslam McKenzie and Rowley 2013). The problem is even more aggravated for the poor and the lower and middle- income population as they are not seeing a significant rise in their affordability for renting or buying new house in the country. Conclusion As is evident from the above discussion, the Australian government, over the years has taken different steps and policies to address the affordability crisis in the housing sector of the country. However, these policies have been partially successful as with the increase in the supply of housings, the demand for the housings has also increased in the country.
5ECONOMICS ASSIGNMENT References Austin, P.M., Gurran, N. and Whitehead, C.M., 2014. Planning and affordable housing in Australia, New Zealand and England: common culture; different mechanisms.Journal of Housing and the Built Environment,29(3), pp.455-472. Dss.gov.au (2018).About the National Rental Affordability Scheme (NRAS) | Department of SocialServices,AustralianGovernment.[online]Dss.gov.au.Availableat: https://www.dss.gov.au/our-responsibilities/housing-support/programmes-services/national- rental-affordability-scheme/about-the-national-rental-affordability-scheme-nras [Accessed 28 Apr. 2018]. Dss.gov.au (2018).National Rental Affordability Scheme | Department of Social Services, AustralianGovernment.[online]Dss.gov.au.Availableat:https://www.dss.gov.au/our- responsibilities/housing-support/programmes-services/national-rental-affordability-scheme [Accessed 28 Apr. 2018]. Haslam McKenzie, F.M. and Rowley, S., 2013. Housing market failure in a booming economy.Housing Studies,28(3), pp.373-388. Randolph, B., Pinnegar, S. and Tice, A., 2013. The first home owner boost in Australia: a case study of outcomes in the Sydney housing market.Urban Policy and Research,31(1), pp.55-73. Shapingfutures.gla.ac.uk (2018).Housing policy and the housing system in Australia: an overview.[online]Shapingfutures.gla.ac.uk.Availableat: https://shapingfutures.gla.ac.uk/wp-content/uploads/2016/09/Shaping-Housing-Futures- Australia-background-paper.pdf [Accessed 28 Apr. 2018].