Housing Market in Australia - Literature review Example

?Home Ownership and Private Rental Sector – An overview of Australian Housing Market Housing ownership has always been a significant area of concern in Australia. The primary reason behind that are rapid changes in its propositions. At one point, the larger share is in the occupancy of private rentals while on the other point, the larger part of share goes into the hand of home ownership. Many authors have conducted researches to determine which sector is dominant in housing sector as well as to identify the primary reasons behind these changes. Some of the most renowned researched covering these aspects have been presented in the subsequent part of this paper. Bourassa (1996) has stated that the measures required for identifying the affordability of housing-ownership is primarily based upon the accumulated data but it is required to ignore the distribution of wealth and income as well as the ranges of housing prices. For analyzing the trend of housing pattern in Australia, Bourassa (1996) builds a study based upon the previous research of Grigsby and Rosenburg. The study then, proposes a method of Borrowing Constraint. The method of Borrowing Constraint was applied from the year 1989 to 1990 for household survey data for Melbourne and Sydney, Australia. The results concluded that there are hypothetical changes in interest rates and deposit requirements are kept minimum. Along with these results, furthermore, it had been concluded that under any given scenario, there is very diminutive percentage of people who are living in rented households to afford private ownership without putting themselves into the circle of poverty (Bourassa). Another study conducted by Beer (1999) stated that there have been many changes in the private rental sector within the housing system of Australia. It has moved itself from the tenure of transition that is primarily comprised of saving of young household. Increase in the prices of real houses, increasing interest rates, increase in the rate of deaths of household through separation and divorces, changes in the pays of workers and inability to maintain the position of the tenure. Moreover, Beer (1999) also stated that there has been decline in access to public housing. Research conducted by Beer (1999) had emphasized on the changing dimensions of the private rental housing within Australia. The nature of investors and the size of investment in the sector of housing stocks had also been examined. Furthermore, the impact of the investment strategies on the housing sector market of Australia was also highlighted (Beer). Hayward (2008) conducted a study to determine whether the property owners in Australia are reluctant or not. The paper covered the history of public housing and property owner in Australia. The study conducted by Hayward (2008) revealed that the golden era of public housing in Australia was from 1945 to 1956. During this time, the Commonwealth State Housing Agreement (CSHA) laid a foundation for making public housing system more viable in Australia. After that, the history of public housing started to cripple in this country. Emphasis on housing policy shifted from rentals to home ownership. Despite of viewing the development of State Housing Authorities, some people claim that this decade was not as substantial nor it was that decade where it would be favorable to return. In long run, the history of Australia is the one where the Government has been best reluctant landlords. The era from 1945 to 1956 is considered as best understood in this general trend (Hayward). The paper presented by Wulff and Maher (2010) examined the housing characteristics of private renters in Australia in long run. The study comprised of a sample of 4677 private renters. The sample had been drawn from ABS Survey of Rental Tenants 1994. The results revealed that 40% of the renters were long-term renters, having rented their property for more than 10 years, which shows that there has been substantial trend of rented household in Australia. Long-term conditions were further divided into returner and continual. Returners were those who were socio-economically diverged and more likely to undergo marital breakdown while continual were those who belong to lower income class and higher unemployment sector. Rental conditions are divided into two parts; short-term rentals and long-term rentals. Long-term rentals are those that are less form aliased sector of the housing market. Short-term rentals are those who pay lease, pay advance or pay a bond. The findings of the paper of Wulff and Maher (2010) challenged traditional view which private rentals have is of transitional and short-term tenure (Wulff). Paris (1984) divided the study in five major segments, the first segment studied the importance of private rental housing systems in Australia, along with it, first segment also covered the contemporary issues related to the local and overseas development during the period of 1060s and 1970s. The second segment discussed about the problems that are involved in the sector of private rentals. This segment focused different types of property owners (landlords) for study. The third section problems, issues and trends were discussed which included the detailed analysis of the extent to which the dwelling availability has changed problems that arise which affects the lower income group or poor tenants. Section four assessed the policies formulated by government and the market processes combination. In the concluding section, some of the problems and issues were redesigned and it is discussed that commitment to equity is way more important that new policies (Paris). Berry (2010) has stated that private rental sectors have always proven to be one f the most important segment of Australia. Even though, after the Second World War, there has been decline in its relation to home ownership, yet private housing has never gone down below 20% of the total housing market. Private housing has maintained this share for the past 40 years. The paper accumulates certain characteristics of private rental housing in Australia. In this regard, a survey has been conducted by Australian Bureau of Statistics. This survey identified responsible factors for the continuation of ownership pattern. Interviews were also conducted of major personalities belonging to the field of banking, superannuation and insurance industries. Current changes in policy and market environment can enhance the likelihood of involvement of institutions for the provisions that is required for social housing as well as rental housing. The financial modeling for this research was conducted at Australian and Urban Research Institute (Berry). Kryger (2009) has put forward hefty amount of statistics for determining the share of private rentals and home ownership in Australia. Kryger (2009) stated that around 70% of households own or purchase homes. According to Australian Bureau of Statistics, this rate has been remarkable stable for over past 40 years. Based on the data of Australian Bureau of Statistics, the rate of home ownership has fallen from 45% to 32% in 1976. It rose to 43% again in 1996 and then fell down to 32% in 2006. According to the study of Kryger (2009), the basic demographic factor behind these changes in household sector is age. Increase in home ownership has primarily driven by age. Along with this factor, other factors contributing to the changes in household sector are affordability, availability of other investment opportunities, household composition and income earners in any given family. Kryger (2009) concluded that overall rate of home ownership in Australia has remained stable in the past four decades (Kryger). Bourassa (1995) conducted another study to provide an overview of the rate of owner occupation as well as policies in Australia. For this purpose, the historical information starting from the census of 1911 and extending to 1991 has been taken. The rate of ownership rose only by small percentage between the census periods of 1911 to 1947. The rate of ownership then rapidly increased to 53% in 1947 and rose to 70% in 1961. However, despite of considerable promotion in housing ownership by state government and Commonwealth, ownership rates have remained quite stable in Australia since then. This point that has been highlighted by Bourassa (1995) has also been mentioned by Kryger (2009) in his study. Furthermore, Bourassa (1995) stated that demographic and economic circumstances are much more considerable (Steven C. Bourassa). Again, this rationale has been mentioned in the study of Kryger (2009). Many other authors have also studied the dynamics of housing sector in Australia for reaching a certain conclusion. Similar study has been conducted by Yates (2000). Yates (2000) has stated that Australia has demonstrated an astonishingly stable position in home ownership and the rate of home ownership has remained stable i.e. at 70% for the past thirty years. However, the purpose of the study of Yates (2000) was to determine whether this rate is sustainable or not. Decomposition techniques employed by Yates (2000) provide evidence of the changing pattern of home ownership in Australia primarily in the period of 1975 to 1994. The results revealed that there is distinct change in the propensities of home-ownership that is neither consistent for different household type nor across age groups. Yates (2000) concluded that it is necessary that significant decline in housing ownership is seen as a matter of concern (Yates). Works Cited Beer, Andrew. "Housing Investment and the Private Rental Sector in Australia." Urban Studies, 36(2) (1999): 255-269. Berry, Mike. "Investment in Rental Housing in Australia: Small Landlords and Institutional Investors." Housing Studies 15(5) (2000): 661-681. Bourassa, Steven C. "A Model of Housing Tenure Choice in Australia." Journal of Urban Economics, 37(2) (1995): 161-175. SC Boursassa. "Measuring the Affordability of Home-ownership." Urban Studies, 33(10) (1996): 1867-1877. Hayward, David. "THE RELUCTANT LANDLORDS? A HISTORY OF PUBLIC HOUSING IN AUSTRALIA." Urban Policy and Research, 14(1) (1996): 5-35. Kryger, Tony. "Home ownership in Australia—data and trends." Parliament of Australia, Department of Parliamentary Services (2009): 1-7. Paris, C. "Private rental housing in Australia." Environment and Planning A 16(8) (1984): 1079 – 1098. Steven C. Bourassa, Alastair W. Greig & Patrick N. Troy. "The limits of housing policy: Home ownership in Australia." Housing Studies, 10(1) (1995): 83-104. Wulff, Marya N N and Maher, Chris. "Long-term Renters in the Australian Housing Market." Housing Studies, 13(1) (1998): 83-98. Yates, Judith. "Is Australia's Home-ownership Rate Really Stable? An Examination of Change between 1975 and 1994." Urban Studies, 37(2) (2000): 319-342. Read More