Housing Needs In Australia

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charset=utf-8">The chart above shows the equilibrium price and
Introduction:quantity before the change in demand for housing;
This paper focuses on the recent news regardinghowever after the increase in demand we expect
housing needs in Australia. From the article it isthe demand curve to shift upwards as shown below.
evident that the nation requires more homes due toThe diagram below shows the supply and demand
the increase in population. This increase has beencurve in the housing industry after the increase in
attributed to immigration and growth in thedemand:
population. This means that the demand for housesThe above chart shows the demand curve and the
have increased more than the supply. The highsupply curve in the housing industry, when the
demand will definitely lead to increase in house prices,demand for houses increase then the demand curve
increase in rent and a substantial increase inshifts from demand curve 1 to demand curve 2, this
homelessness.means that the equilibrium price and the equilibrium
Economic concepts:quantity will be determined by the point where
We use the law of demand and supply to analyzedemand curve 2 intersects with supply curve 1, this is
this article, we also analyze the short term and longat a higher price and also higher equilibrium quantity
term changes in the equilibrium price and quantity ofthan the previous equilibrium. However we also
houses. We use these economic concepts to showexpect the supply to increase so as to meet a
how the prices and equilibrium quantity are affectedproportion of the demand where only 40,000 of
by the increase in demand for houses in Australia andquantity demands will not be met, the diagram below
show how this will change over time. We also discussshows the change in supply:
the possibility of a housing bubble that has beenThe diagram below shows the changes in the supply
common in most housing industries in othercurve as a result of the increase in supply in the
economies.housing industry:
We also apply the law of demand that states that asThe above diagram shows the effect of increase
demand increases then prices will declines and that assupply in the housing industry, from the diagram it is
supply increases then prices will decline. We alsoevident that the increase in supply will result into a
discussion we highlight the various factors that affectslight decline in the equilibrium price, however this
the demand for a good which include the price, tasteprice will still be higher than the previous equilibrium
and preferences and prices of substitutes. Finally weprice, for this reason therefore there is need to
state that in the long run the free market is atensure that the prices do not increase at a higher
equilibrium due to the adjustments that occur in therate and this can be achieved by only ensuring that
demand curve and the supply curve.there is an increase in supply of houses to meet
Summary of the article:demand.
This article states that Australia needs over 1 millionFrom the article it is also evident that Perth homes
homes to cater for the increasing demand for housesare worth less than half a million dollars which is a 3%
in the near future, this increase in demand has beendecline since the beginning of this year while Sydney
caused by immigration and also population growth inhomes cost slightly over half a million dollars. This
the nation, HIA states that over 150,000 homes willmight be attributed to the demand, demand may
be built in the year 2008 to 2009 but this is 40,000increase for one type of a good and decline for the
short of the demand by the population, the articleother good, as a result of the decline in the demand
also states that approximately 1 million homes will bethen prices are expected to decline.
required in the year 2012 to 2013.Conclusion:
This increase in demand will result to changes inFrom the above discussion it is evident that there will
return on property where house prices will rise andbe changes in the demand and supply curve in the
also rent will increase, however despite this increasehousing market, this is due to the increase in the
some areas still lag behind and instead of an increasepopulation in Australia which will result into higher
in the value of property there has been a decline indemand than supply, this will lead to increase in prices
the value, example Perth homes are worth less thanfor the houses and also rent, if the supply does not
half a million dollars which is a 3% decline since themeet demand then there will be an increase in cases
beginning of this year while Sydney homes costof homelessness, therefore there is need to increase
slightly over half a million dollars.supply in order to avoid the high prices of houses and
Economic implication:also the high levels of homeless individuals.
From our above statement there will be changes thatThe high prices in Sydney homes than in the Perth
will occur in the demand and supply in the homehomes can be attributed to the taste and
industry, the demand for homes will increase andpreferences of consumers, this is because the
prices will definitely increase, the following diagramdemand for a good or service will depend 9n the
shows the changes that will occur on the demandtaste and preference of consumers and for this
curve in the Australian housing industry:reason the population may prefer the Sydney homes
The diagram shows the demand and supply curve inand therefore this results into higher prices for these
the Australian housing industry before the increase inhomes.