Nowadays, Australia is facing two crucial economic issues, which are increasing the budget deficit and house affordability. In a long term, those two issues can deteriorate the economy that has been in slow growth in the last three years. First, the increasing budget deficit affects an increase in the Australian debt, which deteriorates the economic growth. Second, as the housing prices are significantly overvalued, the Australian economy grows slowly. (In order to solve the rise in budget deficit issue, the Australian government introduced fiscal policy to boost the economic growth. In addition, the government also decrease the negative gearing and introduce Federal Investment Review Board (FIRB) for dealing with houses affordability issues).
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This leads to decreasing affordability in almost all regions of Australia, with the most unaffordability house prices is Sydney and followed by Melbourne, Canberra, Brisbane, Adelaide, and Hobart (Scutt, 2016). A decline in house affordability mainly caused by foreign investor. The low interest rate make house price cheaper which attracts foreigners, especially Chinese people to buy houses in Australia. According to Clarifier (2015), China demands for Australian house has increased up to 400% in past five years. However, as the time went by, many investors turn to the building owner that sell or rent their house to Australian. The price that they offer is excessively expensive. As a result, lower earners are unable to afford to buy houses as the price exceedingly high. Pascoe (2014) reported that, the average income buys the house with 31.6% income earner above the historical average. It affects Australia cost of living that will decrease the living standard. In addition, the Australian supply is not capable for sufficient the Australian and foreign demand. This problem aggravates condition in housing prices in Australia to climb. This is due to the economy that relies upon the cities to drive economic
This leads to decreasing affordability in almost all regions of Australia, with the most unaffordability house prices is Sydney and followed by Melbourne, Canberra, Brisbane, Adelaide, and Hobart (Scutt, 2016). A decline in house affordability mainly caused by foreign investor. The low interest rate make house price cheaper which attracts foreigners, especially Chinese people to buy houses in Australia. According to Clarifier (2015), China demands for Australian house has increased up to 400% in past five years. However, as the time went by, many investors turn to the building owner that sell or rent their house to Australian. The price that they offer is excessively expensive. As a result, lower earners are unable to afford to buy houses as the price exceedingly high. Pascoe (2014) reported that, the average income buys the house with 31.6% income earner above the historical average. It affects Australia cost of living that will decrease the living standard. In addition, the Australian supply is not capable for sufficient the Australian and foreign demand. This problem aggravates condition in housing prices in Australia to climb. This is due to the economy that relies upon the cities to drive economic