HOUSING IN AUSTRALIA.
According to a worldwide housing survey done by the World Monetary Fund, they rated Australia to be among the highest housing paying countries. Australia was the second amongst the twenty-four developed states to have the widest gap between the cost of the houses and the average revenue of its citizens. This meant that they were the third least places in the world that one could afford to buy a home. Reports also show that Australia overprices housing by fifty-six per cent, reflecting a 215 per cent increase since 1997. This paper seeks to explain the reasons why houses in Australia are usually overpriced and thus not worth the cost.
Australia’s tax system contributes to the unworthy cost of houses. The council imposes stamp duty when buying a home even though plans were there to abolish it during the initiation of GST. Citizens in Australia tend to live in the urban areas making the cities to be densely populated. This leads to land shortage and hence increasing the cost of houses. Besides, research shows that the price of labour and building is comparatively high and as such, the rent to be paid is overpriced. Christopher Joyce, a property analyst of the Rismark group, attributes the heightened house prices to the high disposable incomes of households.
The fractional reserve method of banking contributes to unworthy housing costs. Governments around the world, including Australian administration, usually borrow loans to expand their economies. The leaders also encourage their citizens, even the ordinary people to prosper through debts. This fractional reserve system tendsto make housing expensive. Without this system, people would have less access to loans making people unable to afford homes. The demand for houses would decrease and in turn, reduce the housing costs.