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House Price Determinants in Sydney

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  • Xin Janet Ge
  • Brendan Williams

Abstract

House prices in Sydney have increased substantially over the last ten years. The median price of established houses was $473,630 in 2003 and reached up to $811,837 in June 2014, an increase by around 70 per cent. Many families are forced into the rental market as they cannot afford to own a home at such high prices. According to Demographia (2014), the Median Multiple (median house price divided by gross annual median household income) for Sydney is nine times, compared to 6.2 times in New York and 7.3 times in London. This research studies the main determinants of house price increased in Sydney using the quarterly data collected from Australian Bureau of Statistics and Reserve Bank of Australia. By applying the multiple regression analysis, it is found that the fundamental elements such as population growth, interest rate and the number of house supply were the main factors that contributed to price increased for the last ten years in Sydney.

Suggested Citation

  • Xin Janet Ge & Brendan Williams, 2015. "House Price Determinants in Sydney," ERES eres2015_230, European Real Estate Society (ERES).
  • Handle: RePEc:arz:wpaper:eres2015_230
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    References listed on IDEAS

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    1. Brown, Jane P. & Song, Haiyan & McGillivray, Alan, 1997. "Forecasting UK house prices: A time varying coefficient approach," Economic Modelling, Elsevier, vol. 14(4), pages 529-548, October.
    2. Goodman, Allen C., 1990. "Demographics of individual housing demand," Regional Science and Urban Economics, Elsevier, vol. 20(1), pages 83-102, June.
    3. Steven C. Bourassa & Patric H. Hendershott, 1995. "Australian Capital City Real House Prices, 1979-1993," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 28(3), pages 16-26.
    4. Haurin, Donald R. & Gill, H. Leroy, 1987. "Effects of income variability on the demand for owner-occupied housing," Journal of Urban Economics, Elsevier, vol. 22(2), pages 136-150, September.
    5. Peter Abelson & Demi Chung, 2005. "The Real Story of Housing Prices in Australia from 1970 to 2003," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 38(3), pages 265-281, September.
    6. Goodman, Allen C., 1988. "An econometric model of housing price, permanent income, tenure choice, and housing demand," Journal of Urban Economics, Elsevier, vol. 23(3), pages 327-353, May.
    7. Isaac F. Megbolugbe & Allen P. Marks & Mary B. Schwartz, 1991. "The Economic Theory of Housing Demand: A Critical Review," Journal of Real Estate Research, American Real Estate Society, vol. 6(3), pages 381-393.
    8. Peter Abelson, 1994. "House Prices, Costs And Policies: An Overview," Economic Papers, The Economic Society of Australia, vol. 13(1), pages 76-96, March.
    9. Anas, Alex & Eum, Sung Jick, 1984. "Hedonic analysis of a housing market in disequilibrium," Journal of Urban Economics, Elsevier, vol. 15(1), pages 87-106, January.
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    11. DiPasquale, Denise, 1999. "Why Don't We Know More about Housing Supply?," The Journal of Real Estate Finance and Economics, Springer, vol. 18(1), pages 9-23, January.
    12. Manning, Christopher A, 1989. "Explaining Intercity Home Price Differences," The Journal of Real Estate Finance and Economics, Springer, vol. 2(2), pages 131-149, June.
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    More about this item

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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