3.1 Interest Rate
Interest rate refers to the amount charged, expressed as a percentage to a borrower for the use of resources (Investopedia,2016). The decrease or increase of interest rate can greatly influence a person’s ability to purchase a residential property. This is so as higher interest rates fall, the demand for it increases and vice versa (Harvard,2011).
The impact of interest rate is evidence during its decline in Australian history. In 1990, Australia’s interest rate peaked at 17.5% however a gradual change to 1.75% in May, 2016 (RBA,2016) saw a change in consumerism patterns. The decrease in housing prices influenced consumers to spend into the real estate market creating an ever-so ‘real estate boom’(SMH,2013). As a result, …show more content…
‘Australia’s Bubble’ is a term coined explaining Australia’s recent real estate situation (Lindsay David, 2016). The increased market price for houses due the decrease in interest rate has led Australia’s to over-value Australian properties (Lindsay David, 2016). Author of ‘Boom to Bust’, Lindsay David compares Australia’s recent situation with Ireland’s, stating that Australia’s current situation could have a disastrous end, blaming interests cuts for its occurrence. (NEWS,2016)
Thus proving the statement that interest rates influence the demand and therefore the equilibrium price of the real estate …show more content…
In real estate the demographics of the population influences upon the demand and sub-sequentially market prices. For example: A high income, growing population provides an increase in demand and higher prices. Whereas a high unemployment rate in society will see a decrease in prices and demand for expensive commodities (Brittanica,2015).
A notable demographic factor influencing the demand of houses in Australia is its growing population. The Australian Institute published a report in 2014 in which its stated that Australia was, “Building a city the size of Canberra each year” (ABC,2016). A statement corroborated with the ABS which states Australia will reach the population of 39.7 million in 2055. The growth of Australia as foretold by the ABS is due to the increase in Net Overseas Migration and Natural Increase. Both of these factors, respectfully impacting the real estate market (GOV,2016). A visual representation on the growth of Australia can be seen in graph 5 of the
Interest rate refers to the amount charged, expressed as a percentage to a borrower for the use of resources (Investopedia,2016). The decrease or increase of interest rate can greatly influence a person’s ability to purchase a residential property. This is so as higher interest rates fall, the demand for it increases and vice versa (Harvard,2011).
The impact of interest rate is evidence during its decline in Australian history. In 1990, Australia’s interest rate peaked at 17.5% however a gradual change to 1.75% in May, 2016 (RBA,2016) saw a change in consumerism patterns. The decrease in housing prices influenced consumers to spend into the real estate market creating an ever-so ‘real estate boom’(SMH,2013). As a result, …show more content…
‘Australia’s Bubble’ is a term coined explaining Australia’s recent real estate situation (Lindsay David, 2016). The increased market price for houses due the decrease in interest rate has led Australia’s to over-value Australian properties (Lindsay David, 2016). Author of ‘Boom to Bust’, Lindsay David compares Australia’s recent situation with Ireland’s, stating that Australia’s current situation could have a disastrous end, blaming interests cuts for its occurrence. (NEWS,2016)
Thus proving the statement that interest rates influence the demand and therefore the equilibrium price of the real estate …show more content…
In real estate the demographics of the population influences upon the demand and sub-sequentially market prices. For example: A high income, growing population provides an increase in demand and higher prices. Whereas a high unemployment rate in society will see a decrease in prices and demand for expensive commodities (Brittanica,2015).
A notable demographic factor influencing the demand of houses in Australia is its growing population. The Australian Institute published a report in 2014 in which its stated that Australia was, “Building a city the size of Canberra each year” (ABC,2016). A statement corroborated with the ABS which states Australia will reach the population of 39.7 million in 2055. The growth of Australia as foretold by the ABS is due to the increase in Net Overseas Migration and Natural Increase. Both of these factors, respectfully impacting the real estate market (GOV,2016). A visual representation on the growth of Australia can be seen in graph 5 of the