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A Model of the Australian Housing Market

Author

Listed:
  • Trent Saunders

    (Reserve Bank of Australia)

  • Peter Tulip

    (Reserve Bank of Australia)

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.

Suggested Citation

  • Trent Saunders & Peter Tulip, 2019. "A Model of the Australian Housing Market," RBA Research Discussion Papers rdp2019-01, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp2019-01
    as

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    File URL: https://www.rba.gov.au/publications/rdp/2019/pdf/rdp2019-01.pdf
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    References listed on IDEAS

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    Cited by:

    1. Gianni La Cava & Calvin He, 2021. "The Distributional Effects of Monetary Policy: Evidence from Local Housing Markets in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(3), pages 387-397, September.
    2. Chong Fennee, 2020. "Housing Price, Mortgage Interest Rate and Immigration," Real Estate Management and Valuation, Sciendo, vol. 28(3), pages 36-44, September.
    3. Atalay, Kadir & Edwards, Rebecca, 2022. "House prices, housing wealth and financial well-being," Journal of Urban Economics, Elsevier, vol. 129(C).
    4. Murray, Cameron, 2019. "The Australian housing supply myth," OSF Preprints r925z, Center for Open Science.
    5. Christopher G. Gibbs & Jonathan Hambur & Gabriela Nodari, 2021. "Housing and Commodity Investment Booms in a Small Open Economy," The Economic Record, The Economic Society of Australia, vol. 97(317), pages 212-242, June.
    6. Murray, Cameron & Ryan-Collins, Josh, 2020. "When homes earn more than jobs: the rentierization of the Australian housing market," OSF Preprints 8f67h, Center for Open Science.

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    More about this item

    Keywords

    housing; construction; house prices; vacancies; rents;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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