Essay About Housing Inflation

What are the factors about housing inflation whether could be controlled by the government? Name: EMMA

Introduction

In recent years, there has been growing concern about the phenomenon of housing bubble in Australia. According to RP Data, house prices in Sydney have increased by 16% in the past year, and in other cities by 11%. The current median house price in Sydney now sits at $700,000, $532,000 in Melbourne and $469,000 in Brisbane. As a result, far too much attention has been paid to the phenomenon of housing bubble. Obviously, there are three main reasons that cause the phenomenon of housing bubble. The key reason is imbalance between demand and supply of houses, which increases the demand

Nevertheless, the house and residential land are limited in Australia, thus imbalance between demand and supply of houses is produced in Australia. Admittedly, the Australian government can control the imbalance between demand and supply of houses. Firstly, the Australian government can use three solutions to reduce demand for houses; the first solution is paternalistic rental schemes that involve government low rent to residents that do not have ownership or equity component. Paternalistic rental schemes can solve the issue that parts of people have not houses to live. In addition, the demand for houses can be controlled by foreign investments which mean that the government prevents international speculators from buying houses. Foreign-investment controls can decrease the rate of buying houses. The third solution is refuse vacant houses, which means that the people who buy houses are not allowed to empty the houses; thus, this solution can reduce the demand of speculators for the houses. Secondly, the Australian government can implement two policies to increase the supply of houses. The first policy could establish the affordable housing for citizens, which means that lower income households