Search results

1 – 10 of 144
To view the access options for this content please click here
Article
Publication date: 27 July 2012

Andrew C. Worthington

The purpose of this paper is to analyse the record on housing affordability in Australia over the period 1985 to 2010, conceptually link this with the purported demand and…

Downloads
3478

Abstract

Purpose

The purpose of this paper is to analyse the record on housing affordability in Australia over the period 1985 to 2010, conceptually link this with the purported demand and supply drivers given in the literature, and comment on government policy responses. The paper also provides a suggested framework for future research on housing affordability.

Design/methodology/approach

The paper employs descriptive analysis of measures of affordability using commercial and other information. In addition, the paper undertakes analysis of the affordability drivers and government responses using recent governmental inquiries and other research into housing affordability.

Findings

Housing affordability in Australia has worsened significantly in the past quarter century, including in both urban and regional areas, and is now among the world's most unaffordable. The main contributor at the national level has been the escalation of housing prices because of continuing strong demand arising from strong economic and population growth, the availability of cheaper and more accessible finance, and tax and other incentives for home and investor housing ownership. An additional contributor is unresponsive housing supply resulting from an extensive governmental role in land release and zoning, infrastructure charges, and building and environmental regulation.

Research limitations/implications

As an analytical paper, the central aim is to summarise the findings and conclusions of other work and provide a suggested framework for future research. Accordingly, no attempt made to model directly the relationship between housing affordability, its demand and supply drivers and government policy responses.

Practical implications

There is a need to reassess government policy at all levels as it relates to population, economic, urban, and environmental planning and government regulation and taxation and housing affordability. Need for future empirical work to quantify the causes and consequences of housing affordability.

Originality/value

This study provides a complete account of housing affordability and policy and the literature on housing affordability in Australia over the past 25 years.

Details

International Journal of Housing Markets and Analysis, vol. 5 no. 3
Type: Research Article
ISSN: 1753-8270

Keywords

To view the access options for this content please click here
Article
Publication date: 30 September 2013

Andrew Worthington and Helen Higgs

– Model the drivers of Australian housing affordability and forecast equilibrium affordability. The paper aims to discuss these issues.

Downloads
1579

Abstract

Purpose

Model the drivers of Australian housing affordability and forecast equilibrium affordability. The paper aims to discuss these issues.

Design/methodology/approach

Uses autoregressive distributed lag (ARDL) approach to model housing affordability measured by the Housing Industry Association's Housing Affordability Index (HAI) and the housing price-earnings multiplier (HPE). Six sets of explanatory variables, including housing finance, housing construction activity and costs, economic growth, population, alternative investments and taxation.

Findings

Primary long-run drivers are housing finance, dwelling approvals and financial assets. Economic and population growth only have a short-run influence, while housing taxation has limited impact in long run. Forecasts indicate long-run HAI equilibrium values of 109 (above the historical minimum of 107) and a HPE of seven (below the recent historical maximum of 8.2).

Research limitations/implications

Reduced form model encompassing both demand and supply factors involves complicated interpretation given direct and indirect effects on affordability. Analysis at national level ignores regional impacts that may also affect housing affordability.

Practical implications

The impact of the low rate of new dwelling approvals (public and private sector in the long run and public sector in the short run) points to a persistent structural gap between the demand and supply of housing. Strong economic and population growth often blamed for the worsening of housing affordability, at least in the 2000s, has no impact at the aggregate national level.

Originality/value

Only known paper to provide quantitative estimates of macro drivers of Australian housing affordability over a long period using alternative measures of relative housing affordability.

Details

Studies in Economics and Finance, vol. 30 no. 4
Type: Research Article
ISSN: 1086-7376

Keywords

To view the access options for this content please click here
Article
Publication date: 31 May 2011

Bob Hargreaves

Private sector residential property investors aiming to achieve optimal total returns need to be able to identify the best performing suburbs in a city. The purpose of…

Downloads
513

Abstract

Purpose

Private sector residential property investors aiming to achieve optimal total returns need to be able to identify the best performing suburbs in a city. The purpose of this paper is to analyse the risk‐adjusted investment performance of 19 suburbs within Auckland City and provide some insight into the likely future performance of some of these suburbs.

Design/methodology/approach

The annual pre‐tax and unleveraged investment performance of a residential property is a function of the changes in the value of the property plus the net yield. House price data for the suburbs were taken from the Real Estate Institute of New Zealand. Rental information was obtained from the Department of Building and Housing.

Findings

Surprisingly, the suburb showing the highest average yields was also the suburb recording the greatest increase in house prices. This result appears to be a consequence of government intervention in the form of increased rental subsidies for renters, tax concessions for landlords and low‐deposit home loans aimed for first home buyers.

Research limitations/implications

It is all very well analysing the past performance of suburbs but investors are likely to be more interested in future performance, rather than past performance, when they make buying and selling decisions. In some cases, the characteristics of suburbs that have done well in the past can be useful in identifying suburbs likely to do well in the future.

Practical implications

The hypothesis advanced in this paper is that suburbs with lower than average household income to house price ratios and house income to rent ratios, combined with a trend for household incomes and rents to be increasing above the city‐wide average, are likely to be the best prospects for future residential investment.

Social implications

The main social implication appears to be the unintended consequences of rental subsidies increasing rents and house prices more than the average in the lower priced suburbs.

Originality/value

There has been very little published work comparing total returns on investor housing within a city, by suburb. This has been made possible by the combination of real estate sales information and a comprehensive rental database. In addition, census information on households' incomes at suburban level is also integrated into the study.The study also makes a novel contribution by suggesting variables likely to influence future total returns by suburb.

Details

International Journal of Housing Markets and Analysis, vol. 4 no. 2
Type: Research Article
ISSN: 1753-8270

Keywords

To view the access options for this content please click here
Article
Publication date: 27 November 2018

Anastasia Njo, Narsa I. Made and Andry Irwanto

The dual process of thinking between conscious processes and unconscious processes generate a different decision. Thinking consciously produces rational decisions…

Abstract

Purpose

The dual process of thinking between conscious processes and unconscious processes generate a different decision. Thinking consciously produces rational decisions. However, a person’s cognitive limitation makes him or her simplify complex scenarios and think implicitly result in making decision in heuristics or rules of thumbs. This paper aims to evaluate patterns of decision-making relationships and dual motives for home purchasing by first home buyers and family life cycle in Indonesia.

Design/methodology/approach

Collecting data was done by distributing questionnaires to home buyers within three years (2013-2016). Further data were processed using ANOVA based on group of dual motives, time for buyer and family life cycle.

Findings

The results show that buyers have consumption motives in buying a residence and they behave rational, while investors prefer to buy an apartment and tend to behave heuristics. Dual motives of time for buyers are not significant to decision model. Family life cycle is significant to decision model based on dual motives.

Originality/value

This is an unpublished dissertation study to qualify for graduation.

Details

International Journal of Housing Markets and Analysis, vol. 12 no. 1
Type: Research Article
ISSN: 1753-8270

Keywords

To view the access options for this content please click here
Article
Publication date: 5 June 2017

Chyi Lin Lee

Extensive studies have investigated the relation between risk and return in the stock and major asset markets, whereas little studies have been done for housing…

Abstract

Purpose

Extensive studies have investigated the relation between risk and return in the stock and major asset markets, whereas little studies have been done for housing, particularly the Australian housing market. This study aims to determine the relationship between housing risk and housing return in Australia.

Design/methodology/approach

The analysis of this study involves two stages. The first stage is to estimate the presence of volatility clustering effects. Thereafter, the relation between risk and return in the Australian housing market is assessed by using a component generalised autoregressive conditional heteroscedasticity-in-mean (C-CARCH-M) model.

Findings

The empirical results show that there is a strong positive risk-return relationship in all Australian housing markets. Specifically, comparable results are also evident in all housing markets in various Australian capital cities, reflecting that Australian home buyers, in general, are risk reverse and require a premium for higher risk level. This could be attributed the unique characteristics of the Australian housing market. In addition, there is evidence to suggest that a stronger volatility clustering effect than previously documented in the daily case.

Practical implications

The findings enable more informed and practical investment decision-making regarding the relation between housing return and housing risk.

Originality/value

This paper is the first study to offer empirical evidence of the risk-return relationship in the Australian housing market. Besides, this is the first housing price volatility study that utilizes daily data.

Details

International Journal of Housing Markets and Analysis, vol. 10 no. 3
Type: Research Article
ISSN: 1753-8270

Keywords

To view the access options for this content please click here
Article
Publication date: 27 July 2012

Joanna Poon and Dean Garratt

The purpose of this paper is to present an analytical summary of UK housing policies. It aims to evaluate UK government's housing policies, before and after the…

Downloads
4582

Abstract

Purpose

The purpose of this paper is to present an analytical summary of UK housing policies. It aims to evaluate UK government's housing policies, before and after the publication of the Barker Review, to tackle affordability issues in the owner‐occupied sector. It examines the extent to which housing policy contributes to or alleviates the problem of the affordability of owner‐occupied housing.

Design/methodology/approach

This paper evaluates the impact of UK government housing policies since 2000 on housing affordability by analysing their impact on the dynamics of housing demand and supply.

Findings

The Barker Review, which applied simple economic ideas and techniques in analysing the owner‐occupied UK housing market, argued that increases in new housing supply would help to improve housing affordability. The second Barker Review suggested that changes to the planning system were needed in order not only to increase new housing supply, but to make housing supply more sensitive to changing demands. The Barker Reviews brought about a major re‐think in government policy towards housing, particularly relating to new build and the planning system. However, the heavy reliance on the private sector to provide additional housing has reduced the effectiveness of policy changes. In addition, the adoption by the government of “demand‐side” housing policies has done little to negate the volatility of UK house prices or to raise the overall affordability of owner‐occupied housing.

Originality/value

This paper reflects on government failures in UK housing policy in addressing the affordability of owner‐occupied housing. The findings will be of interest to policy makers and housing researchers.

Details

International Journal of Housing Markets and Analysis, vol. 5 no. 3
Type: Research Article
ISSN: 1753-8270

Keywords

To view the access options for this content please click here
Article
Publication date: 1 June 2015

Gregory Costello, Patricia Fraser and Garry MacDonald

This paper aims to analyze the impact of common monetary policy shocks on house prices at national and capital city levels of aggregation, using Australian data and the…

Downloads
1845

Abstract

Purpose

This paper aims to analyze the impact of common monetary policy shocks on house prices at national and capital city levels of aggregation, using Australian data and the Lastrapes (2005) two-part structural vector autoregressive (SVAR) empirical method.

Design/methodology/approach

The Lastrapes (2005) two-part SVAR empirical method is applied to Australian housing market and macroeconomic data to assess the impact of common monetary policy shocks on house prices.

Findings

Results show that while the impact of shocks to interest rates on aggregate house prices is almost neutral, the responses of state capital city house prices to the same shock can exhibit significant asymmetries.

Originality/value

This paper contributes to the monetary policy–asset price debate by examining the influence of Australian monetary policy on capital city housing markets over the period 1982-2012. To the authors’ knowledge, this is the first empirical study that has adapted this Lastrapes (2005) methodology to the analysis of housing markets.

Details

International Journal of Housing Markets and Analysis, vol. 8 no. 2
Type: Research Article
ISSN: 1753-8270

Keywords

To view the access options for this content please click here
Article
Publication date: 5 August 2019

Vince Mangioni

Australia’s Future Tax System (2009) among its recommendations identified the need for realignment of tax revenue across the tiers of government in Australia, as well as…

Abstract

Purpose

Australia’s Future Tax System (2009) among its recommendations identified the need for realignment of tax revenue across the tiers of government in Australia, as well as the need to raise additional revenue from land-based taxes. In achieving these objectives, this paper aims to examine the revenues generated from land and how capital gains tax may be reconceptualised as a value capture tax resulting from the rapid urbanisation of Australia’s cities. The development of a theoretical framework realigns the emerging rationale of a value capture tax, as a means for revenue to be divested from central government in the form of capital gains, to sub-central government as a value capture tax.

Design/methodology/approach

A qualitative research methodology comprising grounded theory and phenomenological research is used in undertaking the review of tax revenue collection from state land tax, conveyance stamp duty, local government rating and Commonwealth capital gains tax. Grounded theory is applied for constant comparison of the data with the objectives of maximising similarities and differences in these revenues with an analytical construct as defined by Strauss and Corbin (1990, p. 61).

Findings

The paper finds that realigning revenue from land-based taxes against the principles of good tax design provides greater opportunity to raise additional revenue to fund public infrastructure while decentralising revenue from central government. It provides an alternate mechanism for revenue transfer from central to sub-central government while conceptually improving own source revenue from value capture taxation as a new revenue source.

Research limitations/implications

The limitation of this paper is the ability to quantify the potential increase that would be generated in the form of value capture revenue. It is demonstrated in the paper that capital gains tax took over 15 years for revenue generation to crystallise, a factor that would likely occur in the potential introduction of a value capture tax for funding transport infrastructure.

Practical implications

The pathway to introducing a value capture tax is through re-innovating capital gains tax as a value capture tax directly hypothecated to funding transport infrastructure that results in the uplift in values of the surrounding property from which revenue is raised.

Originality/value

This paper provides a new approach in contributing to funding the capital outlay of public infrastructure in lieu of central government consolidated revenue allocated through the Commonwealth Grants Commission. It provides a much-needed approach to decentralising revenue from the Commonwealth to sub-central government in Australia which has one of the most centralised tax systems in the OECD.

Details

Journal of Financial Management of Property and Construction , vol. 24 no. 2
Type: Research Article
ISSN: 1366-4387

Keywords

To view the access options for this content please click here
Article
Publication date: 10 July 2020

Zafirah Al Sadat Zyed, Chooi Sien Low and Peter Aning Tedong

Millennials are considered the best group to intervene in terms of homeownership education as they are of working age and can earn monthly income. However, there is a…

Abstract

Purpose

Millennials are considered the best group to intervene in terms of homeownership education as they are of working age and can earn monthly income. However, there is a concern about the affordability of millennials to purchase a house that will influence their decision in terms of purchasing a house. Further understanding of the home-buying process allows millennials to avoid dishonest and irresponsible sellers, as purchasing a house involves a large sum of money. The purpose of this study is to suggest a suitable delivery mechanism to increase awareness of the home-buying process among millennials in Kuala Lumpur.

Design/methodology/approach

This study adopts a quantitative method to analyse sets of questionnaire survey that were distributed at purposive random sampling in Kuala Lumpur. This study approached respondents with pre-set criteria, which include the respondents to be between 18 and 38 years old, interested to purchase a house and to have at least an initiatory understanding of the home-buying process.

Findings

The findings suggested that there is considerably low awareness of the home-buying process among millennials. However, it is important to note that among the home-buying process, millennials are most aware in the preliminary phase, which is information gathering. Based on these findings, the best delivery mechanism to increase awareness is through online games and training courses, followed by home counselling at a local housing agency.

Practical implications

This study contributes to government agencies and policymakers to interact with society, as education is one of the best methods. It will further enhance their efforts to ensure that the society is well equipped with useful knowledge to avoid the rueful decision of purchasing their first house.

Originality/value

This paper highlights homeownership education by tackling the issue of extensive knowledge of the home-buying process. This is crucial to the foundation of homeownership education, as it reflects the efforts of government agencies and policymakers to ensure homebuyers’ rights are protected in the housing market. This paper will benefit not only policymakers and decision-makers but also first time homebuyers.

Details

International Journal of Housing Markets and Analysis, vol. 14 no. 2
Type: Research Article
ISSN: 1753-8270

Keywords

To view the access options for this content please click here
Article
Publication date: 29 April 2020

Michael Rehm and Yang Yang

The purpose of this paper is to examine housing speculation in Auckland, New Zealand, the second most unaffordable market in the world.

Abstract

Purpose

The purpose of this paper is to examine housing speculation in Auckland, New Zealand, the second most unaffordable market in the world.

Design/methodology/approach

The study considers rental property purchases from 2002 to 2016 within the Auckland region. The authors apply a simple cash flow model that emulates the before-tax investment calculations used during purchasers’ due diligence. From this model, the authors determine whether purchases involved speculation on capital gains or not and the authors estimate the degree of speculation at the transaction level.

Findings

The authors find that housing speculation in Auckland is endemic and its housing market is a politically condoned, finance-fuelled casino with investors broadly betting on tax-free capital gains.

Social implications

Although political leaders have decried that the “speculation-driven housing bubble in Auckland is a social and economic disaster”, the government’s main anti-speculation tool – the Income Tax Act’s intention test – sits idle and inoperable. By holstering this key policy tool, politicians foster housing speculation and use residential property investment to buttress New Zealand’s asset-based welfare system.

Originality/value

The authors develop novel methods to objectively distinguish speculators from genuine investors, measure the speculative pressure applied by individual rental property purchasers and outline an evidence-based approach to operationalise New Zealand’s currently impotent anti-speculation tool, the intention test.

Details

International Journal of Housing Markets and Analysis, vol. 14 no. 1
Type: Research Article
ISSN: 1753-8270

Keywords

1 – 10 of 144