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Assessment 1 HOME HOUSING MARKET IN AUSTRALIA Student Name:

Q1) Research and briefly describe the current market condition on the demand and supply of the home housing market in Australia over the past 5 years in no more than 100 words. Australia's housing sector saw investment inflation rate of 381.2% between December 1991 and December 2021, based to the Aussie Progress Report of 2022. The price of homes rose by 414.6% during the previous 5 years, which was more than Australia's growth rate of 293.1% for units (Aussie, 2022). In Australia, the rise in the value of units over the last 5 years has increased by 4.7%, whereas the yearly growth in home value is 5.6%. The national worth of homes has decreased seven times in the last 5 years, and it has increased steadily seven times as well. Q2) You are to answer the below sub-questions on how each event would affect the home housing market in Australia using key economic concepts, principles and theories taught in Week 1 and 2. i) There has been a surge in immigration into Australia. As a product's supply grows, its market price also rises, and the point of equilibrium moves between the starting point E1 to the point E2 on the supply curve (Gans et al. 2018,seminar .2). As a product's supply grows, its market price also rises, and the point of equilibrium moves between the starting point E1 to the point E2 on the supply curve. A graph's motion across the supply curve represents a change in the quantity delivered. From the first junction point (Q = 1000 and P = $400) to the next confluence point (Q = 1500 and P = $520) on the supply curve. ii) Extreme weather and climate conditions are destroying and damaging a significant number of homes housing properties and delaying the construction of new home housing properties in Australia.

Due to the integration of new housing complexes and the growth in supply from more manufacturers, there will housing supply is going to increment. This won't influence the demand curve in any way. As a result, from S1 to S2, the supply line goes right. Hence, the price of equilibrium goes down from P0 to P1, whereas, the quantity of equilibrium will increment Q0 to Q1. In this graph, the construction material costs go up because of Covid 19 whereas the count of new buildings decrease (Gans et al. 2018, seminar .2). iii) Australians prefer to work and live overseas for a longer period of time. The provider will incur higher costs with each quantity if the cost of production rises. The supply curve turns inward, or to the left, and indicates a rise in manufacturing costs while all else remains constant. For every quantity level, the provider will provide a tiny quantity (Investopedia). iv) Several overseas home housing property developers and construction companies are setting up businesses in Australia to build home houses. As seen in the graph above, real estate construction businesses anticipate an increase in house prices. As housing costs rise, fewer homes will be built, which will make property owners want to sell their properties for more money. Supply falls if it is anticipated by the housing agency that prices will increase. The equilibrium will move from E1 to E2, the shift will be to the left, and the amount requested will rise as a result of customers wanting to purchase more homes. If vendors anticipate a reduced price, supply will rise. It is the market's anticipation of future prices.

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v) More and more home loan borrowers are selling their homes because of unaffordable and high borrowing interest rates, and they are moving into rental properties. Here, people's purchases have decreased due to exorbitant property prices, creating an excess in the market. We refer to it as oversupply. Disequilibrium exists in the market, theoretically, whenever the price is off equilibrium. Furthermore, there is a larger supply than there is demand Because of the higher prices from S1 to S2, there will be more supply, which will cause the supply curve to move to the right. As per the law of supply, this is the case. Nevertheless, this will result in consumer borrowing being "expensive". References Aussie. (2022).30 Years of property trends - How buyer demand has grown and changed over the last 3 decades. Retrieved Dec 11, 2022, from https://www.aussie.com.au/insights/news/30-years- of-property-trends/. Cowen, T and Tabarrok, A, 2015, "Price Ceilings: Rent Controls", Marginal Revolution Gans et al. 2018, seminar .2,The market forces of supply and demand, lecture notes, Business Economics BEO6600, Victoria university, delivered 25 February 2021. Hartman, D. (2021).Production cost increases & and the demand curve. Retrieved Dec 11,2022, from https://smallbusiness.chron.com/production-cost-increases-demand-curve-13595.html. Mulder, CH. The relationship between population and housing. Retrieved Dec 11, 2022, fromhttps://unece.org/fileadmin/DAM/hlm/archive/Key%20note%20population%20and %20housing.pdf.

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