Welcome to Dr Lincoln's blog

Welcome for visiting my blog. Hope you enjoy the visit and always welcome back again. Have a nice day!

2013-01-16

A plague on Aussie housing?

Comments on Philip Soos “A plague on Aussie housing”, 16/01/2013, http://www.businessspectator.com.au/bs.nsf/Article/residential-property-house-prices-housing-mortgage-pd20130115-3Y4BY?OpenDocument

While the article and some comments provide insights to some of the issues related to the housing market in Australia, there is one important point that none of them have touched upon.

That point is: the housing market in Australia is no longer a market for Australian alone and is affected by some international factors.

There are a number of points related to that.

Firstly, the housing market in Australia is relatively small in size.

Secondly, population density is small relative to its land mass.

Thirdly, Australia is geographically located closer to Asia where population is large and population density is much larger.

Fourth, there are rapidly growing economies in Asia and with it many have become relatively rich.

Fifth, the house prices in some Asian countries are relatively high.

Sixth, Australia housing market is relatively open internationally.

All these factors suggest that house prices in Australia are probably higher than otherwise they should be if there were not those international factors.

Having said that, how important those international factors in affecting the prices in Australian housing market needs to be quantified to be clear of their effects.

Of course, relatively low interest rates and the taxation rule allowing negative gearing and deductions undoubtedly have their roles to push the prices higher than otherwise too.

No comments:

Post a Comment