Causes Of Housing Inflation

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

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 for houses, whereas supply of house decreases. Consequently, housing price could exceed the housing value. The second reason involves lower interest rates which mean that interest of debt is limited, which can result in increasing demand for houses. The third reason is loose lending practices that mean bans can lend too much money for the people who want to buy houses. Thus, it will increase the demand for houses. This essay will discuss what the factors that lead to housing inflation are and focus on the ways the Australian government could use to control the phenomenon of housing bubble.
While a variety of definitions of the housing bubble have been suggested, this essay will use the definition first suggested by CHUNG (2014)

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