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MAE101: Economic Principles - Deakin University - Housing Affordability In Australia - Report Writing Assessment Answer
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Subject Code: MAE101
Source: Daley, J. et al. (2018), p16.
Consider Figure 1.0 above, which presents average full-time weekly earnings and dwelling prices. Both time-series have been adjusted for inflation and thus represent their real values. i. Discuss the relationship between the two time-series over the period 1970-2015 and the implications for housing affordability
Source: Daley, J. et al. (2018), p25.
Consider Figure 2.0 above and focus on the time-series index for nominal (non-inflation adjusted) house prices and rents over the period 1997 to 2017.
ii. Briefly explain the trend in both time-series over the past 2 decades. How would the pattern in rents and housing prices over this period provide a mixed blessing for individuals like Cam and Ross? [Hint: Re-watch the ABC’s ‘Hear Me Out’ exclusive and consider the differences in each person’s circumstances.
Question 3 – Market Analysis
According to Daley, J. et al. (2018), the best available estimate of the own-price elasticity of housing supply in the short-run in Australia is somewhere between +0.3 to +0.5, while housing demand has an estimated own-price elasticity of -0.6.
i. What do these estimates tell us about the responsiveness of Australia’s housing supply and demand to an increase in dwelling prices? Remember to use the economic terminology developed in Week 4 lectures and related reading for your interpretation.
This part requires you to draw your diagram electronically using the Insert
i. Shapes feature in MS Word or MS Powerpoint. In the report by Daley, J. et al. (2018), various demand-side and supply-side proposals are put forward to address the problem of housing affordability. These proposals are outlined from pages 97 and 109, respectively. Your task is to choose one of these demand-side measures OR supply-side measures and show its effect on the housing market.
ii. Construct a demand and supply diagram for the housing market. Be sure to give your diagram a title, label your axes, schedules and equilibria. [Note: You do not need to use actual figures in your diagram]. Start by drawing your supply curve to reflect the relative own-price responsiveness of housing supply in the short-run. Now draw in your demand curve to reflect the relative own-price responsiveness of housing.
Report Writing Assessment Answer
Assignment Task: MAE101 The aim of this assignment is to examine housing affordability in Australia and to consider some of the economic factors that have made owning a home, increasingly difficult in Australia. The assignment will draw on your understanding of some of the key concepts and models we have studied in chapters 4 and 5 of Gans et al. (2018). Ensure your responses to the assignment questions use the economic terminology and analysis we have developed in the course. Question 1 – Analysis of Video Using the link below, watch the video that appeared on the ABC. This ‘Hear Me Out’ exclusive discusses housing affordability between two workmates, Cam and Ross. i. Compare and briefly discuss each workmate’s personal experience in relation to housing affordability in their capital city, Melbourne. ii. Based on Cam and Ross’ discussion, list and briefly discuss (2) reasons/factors that have made purchasing a home difficult. iii. List and briefly discuss (2) strategies offered by Cameron that have enabled him to afford to purchase a property. Question 2 – Data and Analysis
Source: Daley, J. et al. (2018), p16.
Consider Figure 1.0 above, which presents average full-time weekly earnings and dwelling prices. Both time-series have been adjusted for inflation and thus represent their real values. i. Discuss the relationship between the two time-series over the period 1970-2015 and the implications for housing affordability
Source: Daley, J. et al. (2018), p25.
Consider Figure 2.0 above and focus on the time-series index for nominal (non-inflation adjusted) house prices and rents over the period 1997 to 2017.
ii. Briefly explain the trend in both time-series over the past 2 decades. How would the pattern in rents and housing prices over this period provide a mixed blessing for individuals like Cam and Ross? [Hint: Re-watch the ABC’s ‘Hear Me Out’ exclusive and consider the differences in each person’s circumstances.
Question 3 – Market Analysis
According to Daley, J. et al. (2018), the best available estimate of the own-price elasticity of housing supply in the short-run in Australia is somewhere between +0.3 to +0.5, while housing demand has an estimated own-price elasticity of -0.6.
i. What do these estimates tell us about the responsiveness of Australia’s housing supply and demand to an increase in dwelling prices? Remember to use the economic terminology developed in Week 4 lectures and related reading for your interpretation.
This part requires you to draw your diagram electronically using the Insert
i. Shapes feature in MS Word or MS Powerpoint. In the report by Daley, J. et al. (2018), various demand-side and supply-side proposals are put forward to address the problem of housing affordability. These proposals are outlined from pages 97 and 109, respectively. Your task is to choose one of these demand-side measures OR supply-side measures and show its effect on the housing market.
ii. Construct a demand and supply diagram for the housing market. Be sure to give your diagram a title, label your axes, schedules and equilibria. [Note: You do not need to use actual figures in your diagram]. Start by drawing your supply curve to reflect the relative own-price responsiveness of housing supply in the short-run. Now draw in your demand curve to reflect the relative own-price responsiveness of housing.
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