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A Model of the Australian Housing Market

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  • Trent Saunders
  • Peter Tulip

Abstract

We build an empirical model of the Australian housing market that quantifies interrelationships between construction, vacancies, rents and prices. We find that low interest rates (partly reflecting lower world long‐term rates) explain much of the rapid growth in housing prices and construction over the past few years. Another demand factor, high immigration, also helps explain the tight housing market and rapid growth in rents in the late 2000s. A large part of the effect of interest rates on dwelling investment, and hence GDP, works through housing prices.

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  • Trent Saunders & Peter Tulip, 2020. "A Model of the Australian Housing Market," The Economic Record, The Economic Society of Australia, vol. 96(S1), pages 1-25, June.
    • Handle: RePEc:bla:ecorec:v:96:y:2020:i:s1:p:1-25
    DOI: 10.1111/1475-4932.12537
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    References listed on IDEAS

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    Cited by:

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    2. James Graham & Avish Sharma, 2024. "Monetary Policy and the Homeownership Rate," Working Papers 2024-11, University of Sydney, School of Economics.
    3. Bence Mero & Andras Borsos & Zsuzsanna Hosszu & Zsolt Olah & Nikolett Vago, 2022. "A High Resolution Agent-based Model of the Hungarian Housing Market," MNB Working Papers 2022/6, Magyar Nemzeti Bank (Central Bank of Hungary).
    4. Glenn Otto, 2021. "Accounting for Longer‐Run Changes in Australian House Prices," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(3), pages 362-374, September.
    5. Yang Yang & Michael Rehm & Mingquan Zhou, 2021. "Housing Price Volatility: What's the Difference between Investment and Owner‐Occupancy?," The Economic Record, The Economic Society of Australia, vol. 97(319), pages 548-563, December.
    6. Ma, Le & Liu, Henry J. & Edwards, David J. & Sing, Michael C.P., 2021. "Housing price dynamics on residential construction: A case study of the Australian property sector," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 525-532.

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