Economic Analysis: Overlooked Victims in Australia's Property Market

This case study examines the economic impact of Australia's property market on often-overlooked groups: renters, singles, owner-occupiers, and retirees. It highlights the challenges faced by renters due to increasing demand and rising rents, the difficulties singles encounter in achieving homeownership, the costs associated with owner-occupiers switching to larger homes, and the burden of high land taxes on retirees. Using economic theories and graphical illustrations of supply and demand, the analysis reveals how these factors affect housing affordability and overall market dynamics, concluding that sharp increases in property prices have created distinct disadvantages for each of these groups. The study utilizes references from established economic principles and real-world reporting to support its findings.

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

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

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

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

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

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

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

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

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.

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/

Thank You