A Model of the Australian Housing Market

Saunders, Trent; Tulip, Peter

doi:10.1111/1475-4932.12537

Cited by 16 publications

(13 citation statements)

References 35 publications

(40 reference statements)

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“…financial liberalisation, increasing household debt, residential mortgage-backed securitisation) that have led to the current dynamics, but how these have interacted with shifts in multiple other policy spheres. 2 Our findings also challenge the economic narrative that rising house prices are primarily driven by the long-term fall in real interest rates creating a divergence between rents and prices (Weeken, 2004;Miles and Monro, 2019;Saunders and Tulip, 2019). Instead, we find that low rates are a necessary, but not sufficient, condition for high house prices.…”

Section: Introductionsupporting

confidence: 54%

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When homes earn more than jobs: the rentierization of the Australian housing market

Murray¹,

Ryan-Collins²

2020

Preprint

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This article develops the concept of housing market ‘rentierization’ to describe the shift in the treatment of housing away from its use as a consumption good to an asset from which economic rent can be extracted, with Australia as a canonical example. Rentierization encompasses, but goes beyond, the financialisation of housing that has been the focus of attention in recent political economy literature as it involves policy changes and coordination across the land and housing market, fiscal-policy as well as financial policy spheres. In addition, we argue, rentierization offers a better explanation of rising house prices than the decline in real interest rates which has come to the fore in the recent economics literature. Our study of Australia examines the returns to land and housing over time and traces the roots of rentierization to developments that preceded the financial liberalisation of the 1980s, including the privatisation of public housing in the 1960s and 70s. We consider some of the reasons for the resilience of Australia’s rentier-oriented housing model, and policy alternatives which might help reduce the logic of rentierization and, in doing so, reduce housing-related inequalities.

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Section: Introductionsupporting

confidence: 54%

“…One argument that has recently come to the fore is that it is low real interest rates -rather than financial liberalisation or supportive tax policies -that are the key demand-side driver of housing and house prices (Saunders and Tulip, 2019; and see Miles and Monro, 2019 for the UK case).…”

Section: Discussion and Alternative Policy Directionsmentioning

confidence: 99%

When homes earn more than jobs: the rentierization of the Australian housing market

Murray¹,

Ryan-Collins²

2020

Preprint

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“…In Australia, Saunders and Tulip (2019) analysed the interrelationships between construction, vacancies, rents and prices in the Australian housing market, and conclude that rapid growth in housing prices and construction can be attributed to low interest rates. Sutton, Mihaljek et al (2017) estimated the response of house prices to changes in short-term and long-term interest rates in 47 advanced and emerging market economies and found that short-term interest rates are an important driver of house prices in most countries, especially the USA.…”

Section: Interest Ratesmentioning

confidence: 99%

The uneven distribution of housing supply 2006–2016

Rowley¹,

Gilbert²,

Gurran³

et al. 2020

AHURI Final Report

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AHURIAHURI is a national independent research network with an expert not-for-profit research management company, AHURI Limited, at its centre. AHURI's mission is to deliver high quality research that influences policy development and practice change to improve the housing and urban environments of all Australians.Using high quality, independent evidence and through active, managed engagement, AHURI works to inform the policies and practices of governments and the housing and urban development industries, and stimulate debate in the broader Australian community.AHURI undertakes evidence-based policy development on a range of priority policy topics that are of interest to our audience groups, including housing and labour markets, urban growth and renewal, planning and infrastructure development, housing supply and affordability, homelessness, economic productivity, and social cohesion and wellbeing.AHURI Limited also gratefully acknowledges the contributions, both financial and in-kind, of its university research partners who have helped make the completion of this material possible. DisclaimerThe opinions in this report reflect the views of the authors and do not necessarily reflect those of AHURI Limited, its Board, its funding organisations or Inquiry Panel members. No responsibility is accepted by AHURI Limited, its Board or funders for the accuracy or omission of any statement, opinion, advice or information in this publication. AHURI journalAHURI Final Report journal series is a refereed series presenting the results of original research to a diverse readership of policy-makers, researchers and practitioners. Peer review statementAn objective assessment of reports published in the AHURI journal series by carefully selected experts in the field ensures that material published is of the highest quality. The AHURI journal series employs a double-blind peer review of the full report, where anonymity is strictly observed between authors and referees.

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“…The persistence in housing service inflation that we found using our model, and which drives our conclusion, is also observed in less structured estimation exercises. For example, Saunders and Tulip (2019) find that rents and house prices are significantly explained by their own momentum in an analysis using a semi-structural econometric model. In fact, they note that rents are unusually easy to forecast due to their persistence.…”

Section: Commodity Prices and Housing Investmentmentioning

confidence: 99%

Housing and Commodity Investment Booms in a Small Open Economy

Gibbs

Hambur²,

Nodari

2021

Economic Record

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We add a housing sector to the Reserve Bank of Australia's small open-economy model to explore the effect of commodity price shocks on housing investment. The model predicts that housing investment booms may follow commodity booms. Commodity booms have a persistent effect on housing services price inflation and they 'crowd out' housing investment. When the commodity boom ends, the combination of higher prices and falling interest rates induces a significant housing investment response. The model attributes a significant share of the recent increase in housing investment in Australia directly to falling commodity prices.

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A Model of the Australian Housing Market

Cited by 16 publications

References 35 publications

When homes earn more than jobs: the rentierization of the Australian housing market

When homes earn more than jobs: the rentierization of the Australian housing market

The uneven distribution of housing supply 2006–2016

Housing and Commodity Investment Booms in a Small Open Economy

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