Discuss about the Socio economic impact of rising house prices on first time buyers in Australia.
The following paper studies the socio-economic effect of such a changing market price on the life of the first time property buyers. Housing is one of the most fundamental needs of the people. Shelter is believed to be one of the three basic needs of the people for their existence in the world (Testa et al. 2018). Ownership of a house is considered to be one of the basic needs of the human beings. It provides security, independence and privacy to the people. Most of the people consider household as their single largest asset. The Australians place household at a high degree in their lives and believes owning household as a key to the financial and mental stability for the family life. Housing also plays a key role in the social well being of the Australians and a proper and effective housing has provided a much needed good and social economic environment that is very much essential for political and social stability and also helps the Australians to maintain a prosperous life (Wang et al. 2018). However in recent times there has been a certain increase in the household prices which has kept the first time customers and also the old customers at bay.
The objective of the project is to find out the socio-economic impact of the rise in the prices of the housing on the first time buyers in Australia. The report has determined the cause of the rising prices of property and housing in Australia in the recent days with a detailed analysis of each of the single element of housing. The following article also seeks to gain a proper understanding of the first time home behavior which presents the profile of the first time home buyers in the island continent.
The following project has taken a quite complex and large topic which has been constructed after analyzing a number of different information and new observations. The project thus has been formulated in consideration of a number of different types of the elements has increased the scope of the project. The following project can be referred by any of the future researchers who intend to carry on a detailed research on the same topic.
Home ownership has been one of the great dreams of the people of Australia since a long time from now. However the recent conditions of the market have turned out to be a great problem for the people of Australia especially the first time buyers of the houses to buy or own houses of their own (Zavisca and Gerber 2016). The prices of both the ownerships and rental have gone up dramatically in the last couple of years especially in the last 20 years. This has led to a serious issue for the low income households and the first time buyers of the country. The affordability of the following section of people has dramatically been reduced because of the prevailing situation. The particular section of the housing market has been segregated from the main line of household owners and is slowly being led to face serious socio-economic issues. The following report will outline the key factors that lead to such a distressed condition of the industry and also discuss the factors leading to the rising cost of the different housing products in the industry. The paper has also determined the role of the government in outlining the problems and taking suitable actions that can be of great help to change the current policies and make the housing sector more affordable to the common people of the organization (Ronald Kadi and Lennartz 2015).
As mentioned earlier, the prices of houses have risen dramatically in the past couple of years. It is quite strange that even after the global credit crisis the housing sector of Australia remains one of the most high rated and costly in the market. The rising price of the households has put a inhuman pressure on the wages to meet the cost of the housing for the Australian population. Most of the Australians especially the middle income households as well as the low income households spend a considerable chunk of their salary to the repaying of the mortgage loan that they have taken from financial institutions to buy their dream home (Ong Wood and Colic-Peisker 2015).
The housing market of Australia saw a peak from the year 2003. The growth in the amount of property price gradually slowed down in the following year which was 2004. The price of the housing saw a sharp increase in each of the years of 2002, 2003 and 2004. The biggest growth in the rise of the prices was in the capital cities and the main business centers of Australia. According to, Lee Ho and Chiu (2016) there were also instances of slow growth and fast growth in different cities of the island continent. Perth experienced the highest amount of growth with figures staring at a whopping 85% increase. The annual average growth of the country stood close to 30% which was surely a great figure. All the other cities of the country including Canberra and Darwin also experienced healthy growth.
The recent debate on housing affordability has concentrated on the sudden decline in the proportion of the first time home buyers of the country (Lee Ho and Chiu 2016). The sudden decrease of the peak of around 33 percent two years ago to a decline of 19 percent in the present times reflects the condition of the current marketing scenario. The main activity in the owner occupier housing finance market has seen a rise from around 430,000 sales in the start of the millennium to around 460,000 sales in the following years. The steady rise continued for the next few years unless it was interrupted in the next couple of years after the sudden rise in the property and the housing (Knoll Schularick and Steger 2017). The rise forced a cease in the buying activities of the people and led to the decline of the industry. First Home Buyer activity has been relatively volatile in the present times as because the people who were buying houses for the first time responded to the incentives implicit. The list of the first home buyers also saw a rapid decline in its numbers due to the change in the market condition.
There are different types of homes that are opted by the first time buyers. The type of homes that are chosen by the first time home buyers is quite consistent with the stage of life cycle developments like the ones that are in line with the income, demographic factors and other similar factors (Jacobs 2015). Detached houses remain the most common choice for the buyers and constitute almost 80% of the total choices as well as the number of homes bought by these kind of buyers in Australia. This is quite common with the dominance of families who are couples with or without the dependent children. The higher density of dwellings refer to an increase in the amount of the first home buyers starting from the years 2001 and continuing uninterrupted for the next couple of years. However the trend of the new home buyers came to an end just after couple of years just because of the sudden rise in the price of the housing and property (Hulse and Yates 2017).
Some of the main factors that are dependent that affect the housing price in Australia are as follows;
There are both positive as well as negative effects on the economy to the hugely rising prices of the housing as well as the rising prices of property over the years. The positive effects of the following include;
On the other hand there are negative aspects to the economy of the country as a result in the price rise of the housing and other similar properties. Some of the negative aspects are as follows;
The rise in the housing prices is thus pushing the economic condition of the mentioned country into a distress. The rise in the prices is forcing the first time buyers to reconsider their decision of buying homes.
Rise in the prices of houses and other properties have a huge impact on the social life of the first time buyers. Similar to the economic impacts of the households and the community as whole social impacts can also act as a negative factor. The main social impacts of such a rise are as follows;
The housing sector of Australia plays a vital role in the economic growth of the country as well as helps in the welfare of the country. The factors affecting the housing prices of the country have shown the growing problems that cripples the industry (Bayer Ferreira and Ross 2016). It is better to improve the housing affordability of the country to make it easier for the first time buyers to buy homes of their choices. The government must sit with the construction sector heavyweights and formulate a proper policy that can be of great help to the present situation of the country. The policies must be user friendly so that the prices of the housing sector does not experience any more rise. The federal Government of the Australia must make it a point to include all the different elements that are needed to form the proper policy for the country and the one which can be of great help for the first time buyers of the country (Barrett et al. 2015).
Conclusion
The following paper has quite well analyzed the current Housing market of Australia and its socio economic impact on the first time buyers. The discussion of all the different elements of the housing related economic and social impacts and the factors behind their cause has been described quite beautifully. The description of the first time buyers, their buying habits and the sudden change of the market and its characteristics has increased the scope of the report. The thorough analysis of the report will help the readers to get a proper and effective knowledge on the present housing scenario of Australia.
Reference List
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Testa, F., Russo, M.V., Cornwell, T.B., McDonald, A. and Reich, B., 2018. Social Sustainability as Buying Local: Soft Policy, Meso Level Actors and Social Influences on Purchase Intentions. Journal of Public Policy & Marketing.
Wang, J., Koblyakova, A., Tiwari, P. and Croucher, J.S., 2018. Is the Australian housing market in a bubble?. International Journal of Housing Markets and Analysis.
Zavisca, J.R. and Gerber, T.P., 2016. The socioeconomic, demographic, and political effects of housing in comparative perspective. Annual Review of Sociology, 42, pp.347-36
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