House Prices in Australia - 1970 to 2003 - Facts and Explanations
AbstractThis paper describes and explains changes in real house prices in Australia from 1970 to 2003. In the first part of the paper, we develop a national index of real house prices. We then discuss the main factors that determine real house prices and some previous attempts to model Australian house prices. We develop and estimate a long-run equilibrium model that shows the real economic determinants of house prices and a short-run asymmetric error correction model to represent house price changes in the short run. Consistent with economic theory, we find that in the long run real house prices are related significantly and positively to real income and to the rate of inflation as represented by the consumer price index. They are also related significantly and negatively to the unemployment rate, mortgage rates, equity prices, and the housing stock. Employing our short-run asymmetric error correction model, we find that there are significant lags in adjustment to equilibrium. When real house prices are rising at more than 2 per cent per annum the housing market adjusts to equilibrium in four quarters. When real house prices are static or falling, the adjustment process takes six quarters.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Macquarie University, Department of Economics in its series Research Papers with number 0504.
Length: 29 pages.
Date of creation: May 2005
Date of revision:
Find related papers by JEL classification:
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-03-05 (All new papers)
- NEP-FIN-2006-03-05 (Finance)
- NEP-GEO-2006-03-05 (Economic Geography)
- NEP-URE-2006-03-05 (Urban & Real Estate Economics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Hrushikesh MALLICK, 2011. "Monetary Policy, Construction Sector Output and Housing Prices in India: An Emerging Economy Perspective," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 11(1).
- Shengzu Wang & Patrizia Tumbarello, 2010. "What Drives House Prices in Australia? A+L4584 Cross-Country Approach," IMF Working Papers 10/291, International Monetary Fund.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Helen Boneham).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.