Australian Housing Market Theory
Introduction
In the last four years Australia 's housing market has the strongest performance to date. In 2013 alone "House prices in the country´s eight major cities rose by 9.48% (6.47% inflation-adjusted) during 2013, up from a minimal year-on-year increase of 2.61% (0.48% inflation-adjusted) in 2012, an annual decline of 4.41% in 2011 and a year-on-year rise of 4.72% (7.26% inflation-adjusted) in 2010, based on figures released by the Australian Bureau of Statistics (ABS)."
The consistent performance possibly indicates that the current Australian housing market may be in a bubble. The reasoning for this can be due Australia 's GDP having steadily risen over the last four years, and the purchasing of residential properties from foreign investors, particularly Chinese investors.
The first thesis of this essay (Section 1) is briefly discussing the problems related to being in a possible real estate bubble, …show more content…
The reason that this theory can be applied to the Australian housing market is due to the strategic decisions that buyers and sellers can make when negotiating. In this case lets say High and Low offers. The buyer obviously prefers to buy Low whereas the seller prefers to sell High. Refer to Figure 2 below. HIGH LOW
HIGH Seller is much better off Buyer is better off
LOW Seller is better off Buyer is much better off
*Buyer on top/Seller on the left side.
In the table above you can see that if the seller offers a high price and the buyer agrees, the seller is much better off than if they lowered a lower price to a buyer willing to pay high. Likewise if the buyer was approached with a lower purchase price and took it, they are much better off as opposed to taking a higher price when they wanted to pay
In the last four years Australia 's housing market has the strongest performance to date. In 2013 alone "House prices in the country´s eight major cities rose by 9.48% (6.47% inflation-adjusted) during 2013, up from a minimal year-on-year increase of 2.61% (0.48% inflation-adjusted) in 2012, an annual decline of 4.41% in 2011 and a year-on-year rise of 4.72% (7.26% inflation-adjusted) in 2010, based on figures released by the Australian Bureau of Statistics (ABS)."
The consistent performance possibly indicates that the current Australian housing market may be in a bubble. The reasoning for this can be due Australia 's GDP having steadily risen over the last four years, and the purchasing of residential properties from foreign investors, particularly Chinese investors.
The first thesis of this essay (Section 1) is briefly discussing the problems related to being in a possible real estate bubble, …show more content…
The reason that this theory can be applied to the Australian housing market is due to the strategic decisions that buyers and sellers can make when negotiating. In this case lets say High and Low offers. The buyer obviously prefers to buy Low whereas the seller prefers to sell High. Refer to Figure 2 below. HIGH LOW
HIGH Seller is much better off Buyer is better off
LOW Seller is better off Buyer is much better off
*Buyer on top/Seller on the left side.
In the table above you can see that if the seller offers a high price and the buyer agrees, the seller is much better off than if they lowered a lower price to a buyer willing to pay high. Likewise if the buyer was approached with a lower purchase price and took it, they are much better off as opposed to taking a higher price when they wanted to pay