MAE101 Trimester 1: Housing Affordability in Australia Assignment

This economics assignment analyzes the housing affordability crisis in Australia, focusing on the challenges faced by individuals like Ross seeking their first home. The report examines the role of misinformation, rising house prices, and the impact of immigration policies. It presents data analysis, including figures illustrating the relationship between average earnings and dwelling prices, as well as wages, CPI, and rent. The assignment explores market dynamics, including elasticity of demand and supply, to understand the responsiveness of housing to price changes. Finally, it evaluates strategies employed to address affordability, such as additional fees and policy framing. The assignment draws on various sources to provide a comprehensive overview of the housing market in Australia and the economic principles influencing it.

Running head: Economics Assignment
ECONOMICS ASSIGNMENT
Name of student
Course id:

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Economics Assignment
Table of contents
Question 1: video analysis...............................................................................................................2
i) Experiencing in housing...............................................................................................................2
ii) 2 reasons that has made housing affordability problematic........................................................2
iii) Two strategy that has been Cameron enabled to affordability...................................................3
Question 2: Data and Analysis........................................................................................................3
Figure 1.0.........................................................................................................................................3
ii) Figure 2.0....................................................................................................................................4
Question 3: Market analysis............................................................................................................5
Reference list...................................................................................................................................6

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Economics Assignment
Question 1: video analysis
i) Experiencing in housing
Australia is known for the problems in the housing sectors that are creating main
hindrance in the development of housing policy that are taken by the government. Moreover, due
to presence of the immigration policy has made the situation worse. Ross is from Nepal and he is
finding it difficult to get his first home in the city of Melbourne. The main problem that is
associated with is that people in Australia do not have any idea regarding how much money is
required to purchase a house. The current price of the house is $28000. One of the most
important fears of people is mortgage insurance. Cam had to pay something extra in order to
purchase the house. The major problem that the economy is facing is that price of house is too
high and the price is increasing continuously. The main problems of housing in Australia are
people are given misinformation and in order to mislead and they are going to increase the price
of the housing before anyone can notice. This is making the housing affordability poor and the
condition for the immigrants and the people those who are coming from abroad. This is one of
the crucial situation in the sense that through the development of better policies.
ii) 2 reasons that has made housing affordability problematic
It has been seen that one of the major problem that the country has faced regarding the
housing affordability is the spread of misinformation and miscommunication that the economy is
possessing within the economy. Throughout the incorporation of this spread of
miscommunication regarding the price bluff and the quantities of housing that are affordable.
Most of the immigrants are not being able to understand clearly about the housing situations and

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Economics Assignment
housing conditions that are prevailing within the economy. Throughout the country, the situation
is such that most of the houses are overpriced and even consumers who are willing to purchase
the house. The current house Cam was living was around $28000. On the other hand, through the
development of these policies those are also having tough condition in Australia. One of the
major aspects in the house affordability is making more problematic. This is important in the
sense that government must indulge better policy framing that is actually helping some of the
private owners to indulge in the smooth movement of the business. On the other hand, another
problem that popped up is that the economy is improving but the per capita growth of the
consumer is not increasing.
iii) Two strategy that has been Cameron enabled to affordability
Two important strategies that have enabled the affordability of housing is that they have
paid extra fee to the housing in Australia. Even Cam paid a huge fee to pay to get the required
amount of housing they prefer. Another important aspect in the affordability is that it will
definitely allow the incorporation of better amount of housing. It is important in the sense that
through improvement the economy will grow and demand better policies of housing.

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Economics Assignment
Question 2: Data and Analysis
Figure 1.0
From the given figure above it can be seen that both the curve of Average full time
earnings and Dwelling price is upward rising. From the time of 1970-2015, the dwelling price of
the house is increasing by huge margin and compared to that the average full time earnings are
not increasing that level. The journey of average earnings is more or less going at constant rate.
The little bit of changes that took place in the average rate of earnings is mainly due to
seasonality index. Through the improvement in the innovation, the problem of housing
affordability has been seen in the form of low probability. The purchasing power parity of the
Australian dollar is not increasing mainly due to the low rate of average income of the
employees. This is truly important in the sense that this will definitely increase the demand but

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Economics Assignment
lack of spending ability within the economy is going to decrease the consumption of the
economy. The demand curve of the economy is going to fall and will shift leftward. On the other
hand, through the increase in the dwelling price, people will shift more towards the rent and will
stay together. On the other hand, through the improvement of the joint dwelling techniques will
automatically improve the development of the housing and that will deliver better amount of
investment within the economy. The relationships among the variables are more or less
increasing in nature and are increasing in the positive direction.
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
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10000
20000
30000
40000
50000
60000
70000
80000
90000
Dwelling index Average earning

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Economics Assignment
ii) Figure 2.0
From the given level of diagram shown above is showing the relationship between wage,
CPI and rent is shown jointly and the house price is shown on the other diagram. From the
diagram, it can be seen that the rate of journey between wage, CPI and rent is going into the
same direction. It is increasing but the growth is happening at a constant growth. This is
important in the sense that it will definitely allow the incorporation of better development of
economic improvement. There is strong relationship between the housing price and the rent. On
the other hand, the income is going upward and will never intersect at each other. On the other
hand, using the above graph is not going to help in the development of resources. It is highly
informative in the sense that through the utilization of resource it is going to incorporate the
development of better improvement in the policy.

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Economics Assignment
Question 3: Market analysis
i) Estimates regarding elasticity
Own price elasticity among the short run is more or less having +0.3 to 0.5. In addition,
housing demand is having estimated elasticity -0.6. The Price elasticity is high and the demand
curve is going to increase with the increase in income. Through the increase in demand with
increase in price. The cross price elasticity is showing the fact that it will be helpful for the
economy. Through the analysis of the own price elasticity it is important for the study to identify
the degree of responsiveness of housing to the change in price of the housing in Australia. This is
important in the sense that through the policy the housing demand will automatically increase if
the price of the housing changes. On the other hand, the own price elasticity is inelastic in the
given case. This is important in the sense that with the change in price in the short run is not
going to change demand by huge quantity.

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Economics Assignment
Reference list
Beer, A., Bentley, R., Baker, E., Mason, K., Mallett, S., Kavanagh, A. and LaMontagne, T.,
2016. Neoliberalism, economic restructuring and policy change: Precarious housing and
precarious employment in Australia. Urban studies, 53(8), pp.1542-1558.
Bell, J., Dale, B., Kameron, C. and Havill, M., 2018. Sharing the Air: The Need for Strata Law
Reform to Reduce Second-hand Smoke Exposure in Multiunit Housing in Australia. Journal of
law and medicine, 25(2), pp.465-488.
Bell, J., Dale, B., Kameron, C. and Havill, M., 2018. Sharing the Air: The Need for Strata Law
Reform to Reduce Second-hand Smoke Exposure in Multiunit Housing in Australia. Journal of
law and medicine, 25(2), pp.465-488.
Bentley, R.J., Pevalin, D., Baker, E., Mason, K., Reeves, A. and Beer, A., 2016. Housing
affordability, tenure and mental health in Australia and the United Kingdom: a comparative
panel analysis. Housing studies, 31(2), pp.208-222.
Gurran, N. and Ruming, K., 2016. Less planning, more development? Housing and urban reform
discourses in Australia. Journal of Economic Policy Reform, 19(3), pp.262-280.
Gurran, N., Gallent, N. and Chiu, R.L., 2016. Politics, planning and housing supply in Australia,
England and Hong Kong. Routledge.
Nicholls, L., Maller, C. and Phelan, K., 2017. Planning for community: understanding diversity
in resident experiences and expectations of social connections in a new urban fringe housing
estate, Australia. Community, work & family, 20(4), pp.405-423.
Rowley, S., Leishman, C., Baker, E., Bentley, R. and Lester, L., 2017. Modelling housing need
in Australia to 2025.

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Economics Assignment
Stats.oecd.org. (2019). Average annual wages . [online] Available at:
https://stats.oecd.org/Index.aspx?DataSetCode=AV_AN_WAGE [Accessed 6 May 2019].