Economics Assignment: Australian Housing Policies, Supply and Demand

This essay provides an analysis of the Australian government's housing policies aimed at addressing affordability issues in the housing sector. It discusses policies such as the National Rental Affordability Scheme (NRAS), housing subsidies like the First Home Owner Grants and Rent Assistance, and tax cuts. The essay examines the impact of these policies on both the supply and demand sides of the housing market, noting that while supply has increased, demand has also risen, preventing a complete resolution of the affordability crisis, particularly for lower and middle-income populations. The essay concludes that the government's efforts have been partially successful, but further measures may be needed to effectively address the housing affordability challenge in Australia.

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
Name of the Student
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Author Note

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Table of Contents
Introduction................................................................................................................................2
Housing policies.........................................................................................................................2
Impacts of housing policies on the housing supply and demand...............................................4
Conclusion..................................................................................................................................4
References..................................................................................................................................5

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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. To address the problem, the government of Australia has planned and
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.

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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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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.

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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
Social Services, Australian Government. [online] Dss.gov.au. Available at:
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,
Australian Government. [online] Dss.gov.au. Available at: 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. Available at:
https://shapingfutures.gla.ac.uk/wp-content/uploads/2016/09/Shaping-Housing-Futures-
Australia-background-paper.pdf [Accessed 28 Apr. 2018].